New article says e-commerce rules could reduce corporate tax, undermining efforts to meet the Sustainable Development Goals
October 3, 2019: A new article by Deborah James from the Center for Economic and Policy Research shows how e-commerce rules limit developing countries’ ability to tax the business activities of transnational corporations, reducing much needed revenue for public services and the development of decent employment and to fund their digital industrialisation.
James argues that attempts to implement a permanent waver on customs duties for electronic transmissions, which includes electronic products provided by some of the biggest players in the tech industry including Netflix movies and tv series, Youtube videos, and Amazon books, could result in significant revenue losses for developing countries. A waver on tariffs has been in place at the WTO since 1996, and research shows that developing countries, which are more reliant on revenue from tariffs, have lost 40 times more revenue than developed countries.
James also argues that e-commerce rules that put a ban on local data storage and local presence requirements and that prevent governments from reviewing source code make it more difficult for governments to assess corporations' tax liability and to hold them to account for these obligations.
The concern is that the big tech lobby is establishing rules that enable them to access more markets and more data while making it increasingly difficult to ensure they pay their fair share of tax. For developing countries this can have serious flow-on effects for their ability to redress poverty and inequality and to achieve their development agendas.
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