Opposition calls for policy on digital services tax

THE Government is being urged to quickly implement a policy on securing revenues from certain digital activities carried out by companies, as major trading partners such as the United States declare their position on a global corporate minimum tax.

Speaking in the 2021/22 sectoral debate in the House of Representatives Tuesday, Opposition spokesman on industry, investment and global logistics, Anthony Hylton, pointed out that some 29 countries have implemented or are seriously contemplating the introduction of a digital services tax. One of the challenges being ironed out by tax authorities in other jurisdictions in the European Union, for example, is how to tax companies that provide digital services, but are located outside of the countries they are providing those services to. Hylton noted that at the Organization for Economic Co-operation and Development (OECD) discussions on the gaps in international taxation are slated to continue this summer, and that with the United States, having articulated its support for a global minimum corporate tax, discussions are accelerating “at breakneck speed”. Under the OECD/G20 inclusive framework on Base Erosion and Profit Shifting (BEPS) initiative, over 135 countries are collaborating to end tax avoidance strategies. The Opposition spokesman stressed that businesses need to know the Government’s position, as it could impact their current and future investments. Hylton explained that the moratorium on imposing duties, tariff, taxes and other charges on Internet transmissions occurred in the early days of the World Trade Organization (Wto)sponsored negotiations between 1995 and 2000 due to concerns at the time was that developing countries would impose tariffs and taxes on the fledgling technology industries, thereby stifling its growth and development. “Since then, much tension has developed between the US and the EU countries concerning measures, threats by the EU (European Union) countries to impose taxes on primarily US companies,” he told the House. Hylton noted that with companies such as Google and Facebook under threat of digital service taxes, the US had threatened retaliation through trade measures. “The matter of a digital services tax must be taken seriously by the Government,” he said.

Hylton noted the recent EU gray-listing of Jamaica for harmful tax practices due in part to the structure of the country’s special economic zone (SEZ) special incentive regime. “Important as the SEZS are to our future, this is a much larger issue than simply an SEZ problem,” he remarked, stressing that the implications of the WTO moratorium, the digital services taxes, and the wider BEPS, and EU tax matters are far reaching and could impact Jamaica’s ability to recover POST-COVID, and to attract investments such as those in the BPO sector. “The implications of these issues are far and wide-reaching. They are potentially game changing. We need to hear from the Government – and if it doesn’t have a policy, one needs to be formulated quickly…the Government should be interested in this escalating debate,” he urged.