PracticeConsultingJonty Bloom – the corridors of power …

Jonty Bloom - the corridors of power ...

This week’s corridor of power takes us all the way to Paris and the Chateau de la Muette, HQ of the Organisation of Economic Cooperation and Development, the OECD.

The impressive chateau houses the offices of the top officials but the main work is done in adjoining blocks of drab 1960s offices.

At the moment they are being cleared of asbestos, making them even more unattractive. But it is in these corridors and, underground in a complex of conference rooms, lecture theatres and translation booths that the real work of the OECD is done.

Here the experts of the OECD debate, analyse, advise and cajole the world’s richest countries, which make up its membership.

Latterly, OECD boffins have been turning their minds to the taxing of e-commerce. The problem is clear. How do you tax something that invisibly slips across borders and between tax regimes?

The OECD has tried to resolve this issue by splitting e-commerce into business-to customer-deals and business-to-business ones and dividing the taxation issue between consumption and direct taxes.

The plan is that in both B2B and B2C deals the recipient’s government should have the right to tax the transaction.

However, it is clear taxing consumers will be more difficult than taxing businesses. For direct taxes there is also the problem of permanent establishment.

The OECD says it comes down to which country the server is in, rather than where the website is based. The British government begs to differ, it is worried about scaring off e-businesses.

Thus the tax rules of 30 of the world’s most powerful countries have been evolving in the conference rooms of a couple of office blocks in Paris. Tax rules are slower to develop than the net but the OECD will get there in the end.

Governments have always found ways to tax commerce and they won’t stop now. Plus ca change.

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