By Jan Strupczewski
BRUSSELS (Reuters) - Europe wants the world's financial leaders to make it their top priority this year to reach a deal on global rules for taxing digital giants like Google (O:GOOGL), Amazon (O:AMZN) and Facebook (O:FB), a document showed.
Finance ministers and central bank governors of the world's 20 biggest economies (G20) meet on Feb. 22-23 in Riyadh to discuss, among other issues, the work of the Organisation for Economic Cooperation and Development (OECD) on the tax rules.
"We need to give the highest priority to finding global solutions to address the taxation of the digital economy and the remaining Base Erosion and Profit Shifting issues," said a document outlining the stance of all European Union members of the G20, plus Britain, which left the EU last month.
"We look forward to ambitious, fair, effective, non-discriminatory and workable global solutions and will redouble our efforts towards a consensus-based solution to deliver this global goal in 2020."
Europe has long pushed to make hugely profitable large tech companies doing business over the Internet pay tax where they sell their services, rather than in tax havens deliberately chosen under what is called "aggressive tax optimisation".
EU politicians, seeking funds to prevent climate change and diminish wealth differences across the 27-nation bloc, are angry that a company like Google, with an annual revenue of more than $160 billion, has been enjoying an effective tax rate in the single digits on its non-U.S. profits - around a quarter of the average tax rate in its overseas markets.
Frustrated with the lack of global progress because of opposition from the United States where the tech giants are based, some countries like France introduced their own digital tax last year. Such moves triggered threats of retaliation via trade tariffs from Washington.
Italy, Britain and Spain have also either already introduced their own digital taxes or plan to do so.
Bowing to the rising pressure, Facebook Chief Executive Mark Zuckerberg will accept in a speech on Saturday that global tax reforms would mean his company may have to pay more taxes in different countries, Politico reported.
The OECD wants to reach a deal on the technicalities of how much and where to tax big digital firms by early July and have a full accord in place by the end of 2020, so as to avoid an escalation of trade tensions over the issue.
The EU has said that if there is no deal at the G20 level, its 27 countries would come up with digital tax system of their own.
(This story corrects in paragraph 6 to read 'annual revenue' not 'annual profit')