Internet firms and taxes: Patch-up job

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China loses its allure

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Internet firms and taxes


Taxmen are doing whatever they can to squeeze more from online businesses



THE international framework for taxing multinationals has been tweaked and refined over several decades under the aegis of the OECD, a club of mostly rich countries. But it remains “a patchwork of national laws and international treaties, frayed by internal and cross-jurisdictional inconsistencies,” laments Ajay Gupta, editor of Tax Notes International.
Internet businesses find it especially easy to exploit the holes in the fabric to shift profits to places with lower taxes. Data on an internet user in one place can be analysed in another, then used to sell advertising, aimed at that user, to an advertiser in a third place. Taxmen generally cannot get their teeth into a web firm’s profits unless it has a “permanent establishment”—an ill-defined term—on their turf.

All this lets …

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