S Korea to join int'l discussion on digital tax

SEJONG, July 23 (Yonhap) -- South Korea said Tuesday it will actively participate in an international discussion on how to deal with a digital tax. The move came days after finance ministers from the Group of 7 agreed that it is urgent to address the tax challenges raised by the digitalization of the economy and the shortcomings of the current transfer pricing system. The G7 is an informal discussion forum of seven major countries -- the United States, the United Kingdom, France, Germany, Italy, Canada and Japan. The finance ministers shared the view that new nexus rules should be developed to address new business models, such as highly digitalized business models, allowing companies to do business in a territory without any physical presence. They also agreed that, in order to avoid double taxation and ensure the stability of the international tax system, robust and effective tax dispute resolution through mandatory arbitration must be a component of this global solution. "Ministers agreed that a minimum level of effective taxation ... would contribute to ensuring that companies pay their fair share of tax," the G7 finance ministers said in a statement last week. The G7 said it looks forward to further progress in the context of the Group of 20 and a global agreement on the outlines of the architecture by January 2020 at the level of the inclusive framework on BEPS. BEPS refers to tax avoidance strategies that exploit gaps and mismatches in tax rules to artificially shift profits to low or no-tax locations. The Organization for Economic Cooperation and Development has said more than 125 countries and jurisdictions are collaborating to implement measures to tackle base erosion and profit shifting (BEPS). In 2015, leaders of the G20 agreed to give countries the tools they need to ensure that the so-called Google tax will be levied against multinationals that try to avoid paying their dues in countries where they make a profit. entropy@yna.co.kr (END)