Truce in digital tax row possible, says OECD contender

'If we have political will and a transparent process, we can get a meaningful outcome,' said Michal Kurtyka, Poland's climate minister

A truce is possible in a bitter international row over the taxing of tech giants such as Google and Amazon if countries show “political will”, a contender to lead the body charged with rewriting the rules has insisted.

The Paris-based Organisation for Economic Co-operation and Development (OECD) has been overhauling tax rules for the digital age, but a lack of agreement has prompted many countries, including the UK, to press ahead with their own measures.

The moves and the resultant threats of trade retaliation could knock up to 1pc off global growth – about $850bn – if a deal is not struck, the OECD has warned.

The US pulled out of talks in June and has threatened to hit back against any countries pushing taxes onto its tech titans.

The global pandemic has already set back the timetable for agreement until mid-2021 from the original deadline of the end of this year.

Michal Kurtyka, Poland’s climate minister and one of the 10 candidates bidding to succeed Angel Gurria as the OECD’s secretary-general, said it was “too early to say” whether a deal would be struck by the new deadline.

He added: “It is a global issue and a problem which engages many countries at the same time. It’s not possible to solve this issue on a bilateral basis. So if we accept OECD as the place where multilateral solutions can be discussed at one table, and can be then proposed to member states for compromise, then I’m confident that we can reach a solution.

“Nobody questions today the fact that the digital economy is changing the way we do many things. We need also to create conditions under which this complex system will be working for the benefit of everybody. If we have political will, if we have a transparent process and the leadership from the OECD, then we can get a meaningful outcome.”

The OECD has drafted technical standards requiring multinationals to pay part of their tax on profits to the countries in which their customers are located, even if they operate online and have no headquarters in that country.

A minimum corporate tax rate could also be imposed on every multinational company, regardless of where it is based.

The controversial move could increase global corporate tax worldwide by $100bn and the US has previously called for a “safe harbour” from the rules, seen as effectively making any new regime optional. Tax analysts are not expecting a significant shift in stance from president-elect Joe Biden.

Mr Kurtyka said: “I have worked extensively with many administrations and I’m very much looking forward to working with the upcoming American administration as well.”

However, the latest flashpoint in the issue comes next month, when France begins collecting its own version of the digital tax, after a temporary delay following a row with the US at Davos. That could trigger retaliatory American tariffs as soon as January.

Chris Sanger, head of tax policy at EY, said: “What the OECD will be trying to do now is convince everybody that, from a technical perspective, there is a workable solution that can be implemented and managed. It is perfectly possible for governments to agree on this. The approach seems to be to get the technical solution before we get the political agreement.”

Mr Kurtyka is one of a clutch of runners for the top job at the OECD, which collaborates with governments around the world on economic performance and setting international standards in areas such as tax.

Other contenders for the role include Philipp Hildebrand, the former head of the Swiss National Bank who resigned in 2012 in a controversy over his then-wife’s currency trading, and Cecilia Malmström, a Swedish former EU trade commissioner.