Commonwealth finance ministers urge progress on taxing digital commerce

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Commonwealth finance ministers urge progress on taxing digital commerce

Monday, October 21, 2019

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WASHINGTON, United States (CMC) — Caribbean Community (CARICOM) finance ministers have joined their Commonwealth colleagues in urging progress on taxing digital commerce to tackle debt.

The ministers say they have also recognised the potential of technology to improve debt transparency while urging closer collaboration to resolve tax challenges arising from growing digital commerce.

The ministers, who met here for the 2019 Commonwealth Finance Ministers Meeting under the theme “Preventing debt crises: the role of creditors and debtors,” noted that revenues from tax collection are important for maintaining debt at sustainable levels, yet can often be impaired by the digitalisation of trade in services, as this often results in countries being unable to determine when, how and where taxes on digital transactions should be collected.

They have therefore agreed that the Commonwealth should bring its powerful collective voice to ongoing discussions at the Organisation for Economic Co-operation and Development (OECD), particularly on behalf of smaller states.

International agreement on digital taxation could enable countries to benefit by taxing large tech giants, even if they do not operate within their jurisdictions.

Commonwealth Secretary-General Patricia Scotland said “the Commonwealth has a distinctive contribution to make by bringing together nations with developed and developing economies to agree on collective approaches and action towards a fair and equitable global system for taxing multinational businesses in a swiftly digitalising economy

“We need a rule-based system that is inclusive, transparent and efficient so that all countries have a means of collecting revenue and are thereby able to avoid accumulating excessive debt. It goes hand in hand with accelerating the gains to be made by addressing climate change and making progress towards achieving the sustainable development goals,” she added.

The ministers during their meeting regarding global trade and geopolitical tensions as having 'intensified', in a context where global debt has risen to an all-time high, estimated at US$19 trillion. They stressed the need to make debt easier to manage for vulnerable countries, and for them to be eligible for periods of relief to stabilise growth during economic shocks.

They also noted that as in the past, disasters can push countries into taking on emergency loans to rebuild and recover. Such debt can easily become unsustainable for most low and middle-income countries, making them vulnerable to debt distress.

During the meeting, ministers also reviewed a suite of Commonwealth initiatives, including a disaster risk portal to offer streamlined and integrated information on available funds to respond to disasters, and a fin-tech toolkit to help banks leverage innovation in the financial sector.

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