Germany Explores GLOBE Proposal To Tax Digital Economy

; posted on
November 15th, 2018

German Finance Minister, Olaf Scholz, endorsed the global anti-base-erosion (GLOBE) proposal, which includes a tax on base-eroding outbound payments, as a long-term approach to tax the digital economy.

The GLOBE Proposal

The GLOBE proposal aims to address the deficiencies in the existing international tax framework in the digital economy caused by the proliferation of business models that lack a traditional permanent establishment in countries in which they operate, as well as their mobile corporate revenues that can be easily shifted to low-tax jurisdictions.  In general, the proposal has three components, a minimum rate of taxation, an income inclusion rule for cases involving controlled foreign companies and a proposal to safeguard the two measures against treaty overrides.


The proposal is one potential option under discussion in the OECD’s Task Force on the Digital Economy. The task force is considering three types of approaches: proposals based on data and user participation, solutions based on a broader approach to amending the allocation of taxing rights, and proposals related to minimum taxation, under which the GLOBE proposal falls. The group’s next meeting is on December 4-5. The GLOBE proposal is still under discussion and is still a technical work in progress, according to the Germany Ministry Of Finance (MOF).

German commitment

German committed to introducing the minimum rates of taxation and effective taxation of digital companies from January 2021 if by the summer of 2020, OECD could not reach any solution. The Germany MOF urged all Europeans to work for global minimum taxation of companies. This would ensure that all companies participate in the financing of our community, including the big digital companies.

Further, German agreed with France to push the global minimum taxation through a joint position paper published in June. That paper set out an agreement between the two countries on a European Commission re-launch of a common corporate tax base proposal and made it clear that both countries support effective minimum taxation.

Source: Germany Ministry Of Finance

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