Social media companies need to pay taxes where they earn: Turkish minister

Social media companies need to pay taxes where they earn: Turkish minister

ISTANBUL - Anadolu Agency
Social media companies need to pay taxes where they earn: Turkish minister

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Turkey has faced problem taxing social media companies, said Finance Minister Mehmet Şimşek. “We believe that social media companies must pay the taxes if they earn money here,” he said at a G20 tax event in Istanbul on May 7. 

According to rules of Organization of Economic Cooperation and Development (OECD), the subject should be a company in order for the government to be able to collect taxes from it, Şimşek said.

“There are many social media and internet companies which earn money in almost all countries, but they do not pay taxes there, but only where they are based. We need to solve this problem, as any economic activity should be taxed anywhere in the world,” he said. 

Praising the OECD’s Base Erosion and Profit Shifting (BEPS) Project, which aims to tackle aggressive practices that erode the tax base of companies and artificially shift profits to low or no-tax jurisdictions, Şimşek said,“Turkey gives full support to the G-20-OECD BEPS project. This 15-point action plan will improve tax transparency as well as eliminate strict banking secrecy.”

BEPS was adopted at the July 2013 Ministerial Council Meeting at the request of G20 finance ministers.
The project is designed to close the gaps exploited by companies to avoid taxation in their home countries by pushing activities abroad to low- or no-tax jurisdictions, undermining the fairness and integrity of tax systems.

Şimşek also said that taxation “is a vital issue, particularly for developing and undeveloped countries. All countries lose very valuable economy due to tax evasion. Indeed, the lost economy could be used for health, education or research and development projects.”

Fighting tax evasion is like fighting international terror, Şimşek said, adding that the global economy needs a healthier system for taxation transparency.

According to a 2011 World Bank report, governments around the globe lost more than $3.1 trillion in annual revenue due to tax evasion.

The size of the shadow economy has also been a challenge for the Turkish government. Turkey is still in fourth place in terms of the size of its shadow economy among members of the OECD. 

Masatsugu Asakawa, chair of the OECD’s Committee on Fiscal Affairs said that the OECD, IMF, World Bank and United Nations have been cooperating on tax transparency.

“Taxation is really a significant issue. [...] We are working to provide a common method to fight against tax evasion,” he said.

The symposium has brought 300 high-profile delegates from 60 countries together to discuss the current rules and to fight international tax evasion.