Chinese, US finance chiefs find common ground on need to reform global tax rules
- Liu Kun says leaders must work together to tackle challenges of digital economy, rapid growth of information technology
- Also speaking at symposium during G20 meeting in Japan, Steve Mnuchin agrees a globally fair and modern international taxation system is needed
While China and the US are at loggerheads over trade and technology, their finance chiefs on Saturday found some common ground on the need to reform global tax rules to cope with digitalisation and the rise of e-commerce.
Speaking at a symposium on taxation during the Group of 20 finance leaders’ meeting in Fukuoka, Japan, Chinese Finance Minister Liu Kun said the international community needed to work together to tackle the challenges brought by the digital economy, rapid growth of information technology and digitalisation.
Liu said it was time for leaders to work out how to address these challenges given that the set of measures developed by the OECD in 2012 to help governments combat tax avoidance was due to expire next year.
He said China favoured a three-pronged approach to reforming the tax rules. First, governments should review taxes on products and services according to their profit centres not origin of production. Second, unilateral tax rules should be removed once agreement is reached on long-term solutions and measures. And third, governments should work together to help design tax rules for developing countries that are not too complex.
“[We need] new rules that are based on sound and generally accepted principles. At present, countries are working to identify the commonalities [of their different systems] if the new rules are to stand the test of time … so that we could find a unifying approach,” Liu said.
