By Irene Gaitirira
Published November 21, 2019
Revenue from tax collection is often impaired by the digitalisation of trade in services, as countries are unable to determine when, how and where taxes on digital transactions should be collected.
Consequently, Commonwealth finance ministers have called for closer collaboration to resolve the challenges arising from growing digital commerce.
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The Ministers, who were attending the annual Commonwealth Finance Ministers Meeting (CFMM) in the US American capital, Washington, DC, on October 17, 2019 agreed that the Commonwealth should bring its collective voice to ongoing discussions at the Organisation for Economic Cooperation 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.
Harris Georgiades, the Minister for Finance of Cyprus, who chaired the meeting, said: “Disruptive technologies are challenging the financial system by increasing competition and reshaping conventional business models, thereby fuelling the creation of a whole new kind of financial ecosystem.”
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During the meeting, the ministers of the 53-country members of the 2.4 billion people Commonwealth of Nations 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.
The Commonwealth gave a presentation on its flagship debt management system, ‘Commonwealth Meridian’, which is used by 63 countries to manage their debt which combines to a total of US$2.5 trillion.
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Patricia Scotland, the Commonwealth Secretary-General, 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.”