The OECD will unveil in April its first conclusions on how to tax internet companies. In an exclusive interview with EURACTIV, its secretary general Ángel Gurría expressed concern about the fragmentation of the EU’s response, expected in March.
Ángel Gurría is secretary-general of the OECD. Prior to that he was secretary (minister) of Foreign Affairs and Finance in Mexico.
Gurría spoke with EURACTIV’s Jorge Valero during the World Economic Forum that concluded last Friday in Davos (Switzerland).
You will present in spring a proposal to tax internet companies. Have you met with some of these firms in Davos?
In April, we will deliver a progress report on taxation of digital sector. We are having conversations all the time with governments and companies.
What will be included in it?
The question is not to set a too rigid set of rules in such a targeted manner against individual products. The regulatory environment for the digital economy is constantly evolving.
The taxation of these digital-based companies and this increasingly digitalised world economy has to take stock of the changing regulatory environment and, at the same time, have some fundamental principles, among them pay the taxes where you generate the profits. The most important element is that this is going to drive the issue of taxing the digital economy for years.
What are the implications?
We don’t have to come up with anything tomorrow or the next month in response to what I would call the political pressure that has been felt in some quarters.
Even in the EU there are different approaches to this. Let’s all do it together, let’s move together. Let’s progress in the OECD context as the G20 decided to do. Let’s respect that calendar. Don’t jump the gun and don’t do anything short-term that would block us from applying long-term solutions.
The EU said that if the OECD proposal is not ambitious enough, the EU would move forward with its own proposal. Is there a risk of fragmentation at the global level on this issue?
I would dismiss that as someone who wants to do something very badly. So let’s hold the horses and look at the enormous importance of doing this after widespread consultation. And worldwide consultation, not any region of the world doing its own thing.
Are you concerned about missing a harmonised approach if Europeans move forward?
This is exactly what we have to avoid. From the Europeans and from anybody else. We are only few weeks away from coming up with this blueprint and it is going to be a collective blueprint. Let’s do it collectively.
It seems that the optimism about Europe’s future is high in the forum. Do you share this optimism?
Europe is looking better. I was very surprise when they [French president Emmanuel Macron] said ‘France is back’. That is great because Merkel never left. But she is a bit busy these days putting together a coalition.
Now what we are witnessing is the consolidation of the leadership after several elections. Many of the uncertainties are moving to the background and now it is about execution and an enlightened view of their own countries, as Macron showed, but also of the region itself, and Europe’s place in the world.
What about plans to bolster the eurozone? Could hopes crash because of the reluctance of several member states?
You can say anything about Europe except that it is fast. You take decisions at 28, or maybe after 2019 at 27. Now it is the time to take those hard decisions on structural changes that may keep the recovery sustainable in the medium term.
At the same time, it is the time to plot the moves of what could be the Europe of the future. Of course you can have a minister of Finance [for the EU] but the most fundamental change is the fact that you have to complete the single market in finance, in capital markets, but also on things like electricity, energy, ‘telecom’.
US President Donald Trump has stolen the spotlight at the forum. Is ‘America First’ compatible with multilateralism?
I was quite interested to listen to [White House economic adviser] Gary Cohn saying that “America First does not mean America alone”. I think it was a kind of nuance.
But all the world leaders are saying that multilateralism is a better way to deal with things, more effectively. Multilateralism adds to the effectiveness and the results. Collective action is objectively and measurably a better option.
So this nuance, is it real?
We don’t know whether all the messages that have been issued out of Davos and every single international meeting in the last few months are going to shape somehow the discourse.
We know that the US’s view of trade is mostly bilateral. But even the possibility of rejoining the TPP was open yesterday. So my expectation is that [Trump’s] views will become less stark and more nuanced as times goes by, simply because reality is always more nuanced.
Do you perceive a real willingness from the US Administration to update, upgrade but maintain the North American Free Trade Agreement (NAFTA) or is the US just playing around?
The answer is absolutely yes. The reason is pretty straightforward. NAFTA has been good for the US, as it has been good for Canada and Mexico. The tens of thousands of businesses in the US that have done well with NAFTA are now very openly and loudly recommending to the government of the US to keep it.
My expectation is that the US Government will hear this call, and recognise that, objectively, this is a good business not only for the US or the other two countries individually, but for North America as a whole as it made the region more competitive.