The American tech giant Google, generating billions of dollars in net profits, paid only €50,000 in taxes in Slovakia last year, the SITA newswire reported.
Google, which opened its Slovak branch in 2011, declared a total revenue of €1.5 million.
While France has passed the temporary 3-percent tax on tech giants like Facebook and Google, Slovakia is not considering a similar step. However, the Finance Ministry has announced a change will come next year, SITA wrote.
OECD's global tax reform
Slovakia supports the collective solution, which is being prepared by the Organisation for Economic Cooperation and Development (OECD).
“We prefer the solution that has been agreed upon on the global level within the ongoing OECD discussions,” the Finance Ministry said, as quoted by SITA. The solution is expected to be approved in 2020.
The OECD plans to introduce a minimum global corporate tax and thus reflect on the digitalisation of the economy, which has not been taken into account by the international tax system to date.
“These challenges chiefly related to the question of how taxing rights on income generated from cross-border activities in the digital age should be allocated among countries,” the OECD said in one of its public consultation documents.
Google supports the OECD plan
Karan Bhatia, Google's Vice President for Government Affairs & Public Policy, has already admitted in one of Google's blog posts that the global tax system should change. However, he warned against individual tax approaches that have already been taken by some countries.
If these countries claimed the tax, which is currently paid in the USA, it could lead to the increase of business tensions, he added.
Instead, Google has embraced the OECD's stance to end uncertainty and to develop new tax principles.
“We call on governments and firms to work together and speed up tax reform and create a new, lasting global agreement,” Bhatia said, as quoted by SITA.
Google pays the most in the USA
The total tax rate has shifted to about 23 percent in the last 10 years, which is slightly less than the average rate in OECD countries, according to Google.
“Most of these taxes are paid in the USA,” said Bhatia, as quoted by SITA.
This is because Google was established in the USA. The tech giant, however, also paid taxes in 50 other countries, where the firm has branches selling Google services.
30. Jul 2019 at 22:02 | Compiled by Spectator staff