In recent times, the global debt has hiked of all-time to $19 trillion which is due to the massive digitalization that has been affecting taxation.
Commonwealth finance ministers emphasize the urgency for making a global system to tax business for internet trading.
Online trading services have been increased massively over a decade and a large portion of the global economy is connected with it. The growing use of mobile phones in countries like India and China, faster internet services and enhancing features of smartphones are the reasons behind it. Tech giants such as Google LLC, Facebook Inc and Amazon.com Inc make huge profits cropping up taxation problems.
Newly formed tycoons are often slammed for underpaying taxes in countries and tax havens.
At the 2019 Commonwealth Finance Ministers Meeting, the main issue that was mulled over was the increasing taxation problem which added to the global debt, estimated at $19 trillion, highest of all time. They came forward for an international agreement on the taxation of digital services that will be beneficial typically for small countries by exhorting taxes from tech giants even without their jurisdictions.
The meeting was held in Washington DC, where the ministers could not agree more with the discussion on taxing of e-commerce businesses at the Organization for Economic Co-operation and Development (OECD). Previously, they came up with a corporate taxation system to extract more from the MNCs. They introduced a new debt management system, ‘Commonwealth Meridian’ which is currently in use in 63 countries to manage $2.5 trillion in debt.
Now is the time to have a rule-based system that is effective with proper transparency and all-inclusive so that all countries can avoid excessive debt cries by collecting revenue as stated by the Commonwealth Secretary-General Patricia Scotland.
She speaks more about it. She says it is beneficial side by side with the gain made by climate change and taking steps towards sustainable development goals.
It is now or never to act upon the debt crisis to make it sustainable for vulnerable countries. This will really benefit them in adversity and at the time of emergency or economic shocks.
Economic shock or emergencies can occur abruptly and in that period of adversity it becomes very difficult for small and low and middle-income countries to recover, so they take loans to rebuild the structure which pushes them into forever debt crisis.
According to Harris Georgiades, minister of finance of Cyprus, the financial system of the world is challenged by inventive technologies that are reshaping the conventional business structure, works as a catalyst to give birth to a new type of economy.
At the 2019 meeting of the Commonwealth financial ministers, the ministers presented initiatives like:
A disaster risk portal that will guide with integrated information on available funds to respond to disasters,
A fin-tech toolkit that will help banks leverage innovation in the financial sector.
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