The GSMA and European telecom operators group ETNO have called for telecom operators to be excluded from the new international taxation rules being drawn up by the OECD. In a joint statement, the groups said the industry already makes a substantial contribution to local infrastructure, national taxes and regulatory fees, so should not be subject to any additional tax under the new rules proposed for multinationals.
The OECD is working on two methods of re-allocating income generated by multinationals to national governments. Known as Pillar 1 and Pillar 2, these would affect companies making over EUR 20 billion in annual revenues and a net profit margin higher than 10 percent, and companies providing certain digital services with income of at least EUR 750 million.
Financial services and extractive industries such as mining and oil production have already been excluded from Pillar 1. The telecom industry said it shares a number of characteristics with those industries that would justify its exclusion as well, such as licensing fees, industry-specific levies, extensive regulation and a link to local physical infrastructure and domestic-only customers. Furthermore, the OECD's preliminary report already proposed excluding providers of internet access services or other connections to electronic networks from the types of digital services covered by the tax rules.
The GSMA and ETNO welcomed the proposal, but said they were concerned about the shift in intent behind the rules. What started out as a way to levy tax on internet companies where their customers are based has shifted to a broader plan to increase taxation of multinationals. This means the telecommunications industry, "who already pay their fair share of taxes", could end up subject to double taxation, the groups warned.
The OECD aims to finalise the proposals in October. As of 12 August, 133 countries around the world had agreed to support the measures.
