0 comments on “Digital Tax Proposals Produce New Discord in the EU”

Digital Tax Proposals Produce New Discord in the EU

taxThe European Union is preparing to debate the way corporate taxes are calculated and paid. In the coming months, the European Commission and large EU countries like Germany and France will present proposals to change regulations that currently allow companies, especially in the digital sector, to report their income and pay taxes in low-tax nations even if most of their earnings are generated in countries where taxes are higher. But many smaller member states, such as Ireland and Luxembourg, see this potential change as a threat to their economic models. A battle between large and small member states could result, creating further divisions in the European Union during a time in which the bloc is trying to introduce reforms in several areas.

The governments in Paris and Berlin are determined to stop what they see as unfair competition from smaller countries that offer tax deals to multinational corporations in the digital economy. Internet giants like Apple Inc., Facebook, Amazon and Google pay few taxes in the EU countries where most of their consumers are located because they have subsidiaries in low-tax EU members like Ireland and Luxembourg. France and Germany are working on proposals that would require companies in the digital sector to pay taxes where they generate money, rather than where they are legally registered. Italy and Spain support these proposals, which are expected to be introduced by June.

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Meanwhile, the European Commission is working on its own proposals to make internet companies pay higher taxes in the EU countries in which they operate. The commission is considering options such as a levy on revenue generated from the provision of digital services or advertising activity, or a withholding tax on digital transactions. Brussels will present its suggestions in late March. These proposals are part of a more ambitious plan, because the commission wants to introduce a single set of rules to calculate the taxable profits of all large companies operating in the European Union. In EU jargon, this is known as a Common Consolidated Corporate Tax Base. Its goal is to present multinational companies with a single EU system to compute their income, instead of the different national rules that exist today. According to the European Commission, this would reduce red tape in Europe while also eliminating the existing mismatches among national tax systems.

But not every country embraces these potential changes. Ireland has been particularly critical, because the proposed reforms threaten its economic model, which is based on offering tax incentives to multinational companies. Some countries in Northern and Central Europe also contend that the European Union does not have the right to interfere with their tax systems.

At this stage, none of the proposed plans implies the imposition of a common corporate tax rate, but Ireland and others like it are concerned that this could happen. Those tax rates vary among EU countries, from below 15 percent in Hungary, Bulgaria, Cyprus and Ireland, to above 30 percent in France and Belgium. Ireland and other low-tax countries fear that the proposed reforms would open the door for the European Union to try to establish a minimum corporate tax rate. This fear is not unfounded: France has said its supports such an idea.

Even if Ireland has the power to block EU initiatives on tax-related issues, the bloc’s heavyweights can find ways to pressure Dublin not exercise it.

The Battles to Come

Reforming the way digital companies are taxed will not be easy. Changes in EU tax rules must be approved unanimously, giving individual countries veto power. The European Commission has said it wants to change the voting mechanism for this issue, but doing so also requires unanimity.

Even if Ireland has the power to block EU initiatives on tax-related issues, the bloc’s heavyweights can find ways to pressure Dublin not exercise it. For example, the European Union supports Ireland’s position that the border between it and Northern Ireland must remain open after Brexit and is asking the United Kingdom to find a solution to the problem. But in exchange for its continuing support on the matter during the Brexit negotiations, the European Union could ask Ireland to drop its opposition to tax changes. This is probably one of the reasons why Dublin has sought to enlist other EU countries on its side in the tax fight.

Should the European Union fail to find unanimity on this issue, a smaller group of countries could decide to implement reforms without involving the entire bloc. This would be only a consolation prize for the likes of Germany and France, as the changes probably would not be sufficient to end what they perceive as unfair competition from the low-tax countries. As a result, pressure on those countries probably will continue regardless of the future of specific measures currently on the table.

A Digital Single Market?

The debate over the best way to tax digital companies is a natural consequence of the rapidly increasing importance of the sector. Only one digital company was listed among the top 20 companies in Europe by market capitalization in 2006. By 2017, nine were, led by the U.S. giants. According to a recent report by the European Commission, revenue of the top five e-commerce retailers operating in Europe grew by an annual average of 32 percent between 2008 and 2016. During the same period, the revenue of the entire retail sector in the European Union grew by a yearly average of 1 percent. The rapid change is forcing policymakers to undertake the complex process of adapting to the new environment. Increasing the complexity with internet-based companies is that unlike traditional businesses, it is hard to determine exactly where value is created and how profits should be taxed.

Ireland and others have argued that the issue should not be discussed at the EU level, but rather at the level of the Organization for Economic Cooperation and Development (OECD), a club of rich countries. Ireland and other low-tax nations argue that restricting the reforms to the European Union would reduce the bloc’s competitiveness and make it less attractive to foreign investors. They also argue that a change in taxation could lead to higher prices for consumers. While the European Commission supports the idea of discussing the issue at the OECD level, it has said it is willing to push ahead with a European solution in the likely case that a broader consensus cannot be found.

Ultimately, these disputes are the result of an attempt by Brussels and the largest EU countries to move the bloc toward a federal system. Just as the European Union created a single market for the movements of goods, services, capital and people, it is now trying to introduce a “digital single market” with uniform rules. For many EU member states, this push will threaten their national interests and economic models. For tech companies, the taxation issue is only the tip of the iceberg. In the coming years, disputes with the European Union over issues such as data policy and privacy regulations will also surface.

France and Germany will probably reach an agreement between themselves on the taxation issue in the coming months and, together with other big economies like Italy and Spain, pressure smaller EU members to accept their plans. But unanimity probably will be hard to find, and the bloc will have to decide whether to pressure the rebel members to comply, at the risk of deepening fragmentation in the bloc, or to simply leave the reforms to a smaller group of countries.

source: https://worldview.stratfor.com/ 

 

 

0 comments on “Wanchain wants to power the new digital economy”

Wanchain wants to power the new digital economy

President Dustin Byington has a clear vision for Wanchain, a company using the blockchain to power the new digital economy.

Wanchain believes the “digital economy’ will soon become simply the “economy.” Just like photography has been digitized, crypto-finance will be too as increased functionality and transparency attract more people. That will increase pressure on companies to produce crypto assets and governments to develop cryptocurrencies which will, in turn, drive participation rates even higher.

We’re still in the early stages, where blockchain pioneers are laying the groundwork upon which future gains will be made. Those efforts include the creation of blockchains for each digital asset which help track their path but which makes it difficult to communicate between chains. First came Bitcoin, which Ethereum improved with smart contracts.

Wanchain links crypto-assets via cross-chain smart contracts so banking applications can be developed that guide flows on-chain between different cryptocurrencies.

“Wanchain’s is a fully programmable blockchain,” Mr. Byington said. “Developers can build any app on us, then when they have proxy tokens on the same ledger, we can do things like decentralized exchanges that are applications sitting on top of the blockchain.”

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Say a user wants to use Wanchain’s blockchain to exchange ETH for LTC. The users deposit their ETH into Wanchain. The ETH is technically locked on the Ethereum blockchain as a new proxy token (W-ETH) is minted on Wanchain’s blockchain.

“The W-ETH is a receipt for ETH,” Mr. Byington explained. “It is a bearer instrument which means that anyone that holds it can cash it.”

Another user deposits LTC onto Wanchain, receiving W-LTC in return. The Wanchain blockchain recognized the W-ETH and W-LTC. Using an on-chain exchange built on Wanchain, for example, the Kyber-Wanchain Decentralized Exchange, the user facilitates the W-ETH/W-LTC trade before cashing out the W-LTC for LTC. The W-LTC is technically burned and the LTC that was locked on the Litecoin blockchain is unlocked.

Wanchain also offers WAN Smart Contracts, which allow people to deploy smart contracts with Monero-level privacy protection on Ethereum. Once in possession of a special token, users can issue a token with privacy protection too. With each new coin comes increased utility.

“We’re the world’s first smart contract platform with ring signatures,” Mr. Byington said. A ring signature is a digital signature which can be completed any one of a group of key holders, meaning any message signed in this manner is endorsed by a member of the key holder group. Transactions are validated by a group.

“There is no central counterparty risk, as transactions are not controlled by any one single person but by a group of validators,” Mr. Byington said.

Private smart contracts enable institutions and other high-volume exchange participants to transact without the rest of the world knowing, a key threshold if crypto exchanges are to become commonplace, Mr. Byington said.

“If you go on to other blockchains, there is no privacy protection. That public transparency is not the right architecture for future financial infrastructure.

“We think individual privacy is a building block.”

Mr. Byington used the digital photography analogy as he imagined a future where the world’s assets become digitized, taken out of the physical world and replaced with 0s and 1s.

“Our vision is one where many of the world’s assets can be digitized and their flow and movement governed by an app sitting on top of Wanchain. We;re not rebuilding, we’re recreating.

“This is the new finance.”

source:www.banklesstimes.com

0 comments on “USA – Cyberspace and Digital Economy Bureau proposal”

USA – Cyberspace and Digital Economy Bureau proposal

US Secretary of State Rex Tillerson wants to develop a Bureau of Cyberspace and the Digital Economy, according to a letter from him to Edward Royce, the chair of the committee of foreign affairs.

The bureau, as described in the letter, would help the US lead international efforts in all aspects of cyberspace. As the world, its economy, and its businesses become increasingly digital, a group of informed experts may be necessary to help develop policies in the US and abroad.

“With increasing incidents of disruptive global cyber attacks, including some sponsored by nation states, and the emergence of the digital economy dependent on internet connectivity, U.S. international leadership in this area will be important in the years to come,” Tillerson wrote.

Cyberspace and Digital Economy Bureau proposal

0 comments on “Bank of Canada warns of leaving winner-takes-all digital economy unchecked”

Bank of Canada warns of leaving winner-takes-all digital economy unchecked

bank-of-canada-wilkinsAccess and control of user data could easily enable companies to drive out their rivals, official says.

A top Bank of Canada official is warning about the risks related to the growing dominance of only a handful of big firms in the digital economy and, more specifically, their monopoly over user data.

Senior deputy governor Carolyn Wilkins said in a speech Thursday that policy adjustments should be a priority for governments concerned about the negative economic consequences of leaving the market power of some of the largest tech companies unchecked.

In prepared remarks of her speech, she said the digital economy is a promising way to raise economic growth and living standards — as long as efforts are made not to leave people behind.

However, the rise of so-called superstar firms can also lead to fewer jobs than those created by conventional companies and make it easier for some to avoid taxes because production isn’t tied to a fixed location.

She also noted that the access and control of user data could easily enable companies to drive out their rivals and weaken the healthy, economy-wide benefits of competition.

“The winner-takes-all effect is magnified in the digital economy because user data have become another source of monopoly power,” she said in her address in Montebello, Que., at a G7 symposium focused on innovation and inclusive growth.

“We are not going to get the full benefits of innovation if we leave market power unchecked.”

Wilkins noted that the world’s five biggest technology companies have a market capitalization of about $3.5 trillion US — almost one-fifth of the size of the U.S. economy.

She laid out several possible solutions like modernizing anti-trust and competition policy as well as exploring data-ownership rules, such as giving users control over their own data.

Wilkins also said more legal clarity is needed in many jurisdictions to deal with concerns over data privacy, security, intellectual property and consumer rights.

Her message on data came as leaders in Canada’s tech community press governments to develop a plan to help the country reap the rewards and address the risks associated with the increasingly important world of big data.

A spokeswoman for Economic Development Minister Navdeep Bains has said there is a role for Ottawa in helping Canada become a leader in data and that discussions are underway.

0 comments on “Leverage the Digital Future for Prosperous Communities”

Leverage the Digital Future for Prosperous Communities

1200px-APEC_Logo.svgSharing the benefits of growth and embracing the digital economy were key themes for senior Asia-Pacific business leaders meeting in Auckland, New Zealand this week.

At its first of four meetings for 2018, the APEC Business Advisory Council (ABAC) welcomed the forecasts for strong regional growth, noting the IMF prediction that Asia-Pacific GDP would expand by 5.4% this year, far outstripping the rate of 2% in advanced economies.

“Growth is clearly an essential but not a sufficient condition for secure and prosperous communities,” said ABAC Chair for 2018, David Toua. “We need to look closely at our economies’ policies to ensure that people can actually take advantage of the opportunities that growth brings. Harnessing inclusive opportunities is a key mantra for this year,” added Mr Toua.

Mr Toua explained that a second big focus was the digital economy. “We have created a new working group to focus specifically on digital and innovation issues,” Mr Toua explained. “The digital economy is growing exponentially. We are seeing a surge of disruptive business models. Even in traditional sectors like agriculture and manufacturing, innovative technologies, digital services, fintech and e-commerce are now central.

“Importantly, the digital economy provides a springboard for small business, women and other disadvantaged groups to take part in trade and connect around the region.

“But we cannot realise the full potential of a ‘Digital Asia-Pacific’ without putting resources and energy into countering the digital divide that risks leaving the most vulnerable behind. In all economies, we also need to nurture a future-ready workforce. That means putting in place the right settings for digital infrastructure, skills and education, and region-wide digital business- friendly regulation,” said Mr Toua.

ABAC members had welcomed the recent conclusion of the Comprehensive and Progressive Trans-Pacific Partnership by 11 APEC economies, Mr. Toua noted that “the agreement was seen as one of the key ‘pathways’ to an eventual integrated Free Trade Area of the Asia Pacific.”

Other priorities discussed included improving connectivity; structural reform especially in the services sector; reducing trade and investment barriers; facilitating creating opportunities for micro, small and medium enterprises; strengthening financial systems, and grappling with issues around sustainable growth such as food and energy security. “Big strategic considerations we will look at include ‘smarter globalisation’ so that the benefits are more widely shared in terms of jobs and living standards, and our ‘Vision’ for the region in the coming decades,” said Toua.

“Our Auckland meeting was also the occasion for our annual Dialogue with APEC Senior Officials. We had extended discussions including on the APEC Post 2020 Vision which will help both sides to develop robust policy approaches on all our key issues for the period ahead,” concluded Chairman Toua.

0 comments on “EU moves to remove barriers to data flows”

EU moves to remove barriers to data flows

eu-data-protection(Reuters) The European Union will seek to break down barriers to the flow of data between businesses in future trade deals, as it tries to promote a more digital economy while also protecting privacy.

Cross-border data flows are key to most businesses. These can include moving around employee information, sharing credit card details for online transactions, and identifying people’s browsing habits to serve them targeted advertisements.

The EU has drafted provisions, seen by Reuters, to be inserted in future trade agreements which tackle protectionist measures by third countries restricting the flow of data. They should also ensure that the bloc’s strict data protection rules will not be undermined.

In addition, the articles on data flows and data protection will be excluded from any investment court set up as part of a trade deal to settle disputes, ensuring that data protection issues will be under the jurisdiction of the EU’s highest court.

“Cross-border data flows shall not be restricted between the Parties by … requiring the localisation of data in the Party’s territory for storage or processing,” the provisions say.

They also prohibit the requirement that businesses use specific computing facilities in a country’s territory.

A number of countries have introduced measures forcing companies to store data on local servers, prompting warnings from the technology industry that such moves only serve to balkanise the internet.

Russia said last year that it would block Facebook unless the social network complied with a law requiring websites that store the personal data of Russian citizens to do so on Russian servers.

Data protection is a fundamental right in the EU and therefore cannot be the subject of negotiation in trade deals. But the growing digitalisation of the economy has prompted the EU to look at how it can foster data flows without compromising privacy.

The EU normally looks to facilitate commercial data flows by recognising a third country’s privacy framework as equivalent to that in the bloc, meaning businesses can easily transfer and store data overseas.

Only 12 currently meet the standard, and the US had to negotiate with Brussels for over two years to be granted so-called “adequacy” status.

The EU is negotiating a data transfer deal with Japan which it hopes to conclude this year.

“These horizontal provisions – once included in future trade and investment agreements – will for the first time provide for a straightforward prohibition of protectionist barriers to cross-border data flows, in full compliance with and without prejudice to the EU’s data protection and data privacy rules,” the European Commission wrote in a letter to a member of the European Parliament on Friday.

 

0 comments on “Park of High Technologies in Belarus holds hackathon on blockchain and cryptocurrency”

Park of High Technologies in Belarus holds hackathon on blockchain and cryptocurrency

mainlogoThe business-incubator of the Park of High Technologies has held a hackathon on blockchain and cryptocurrency for the teaching staff. Its participants came from different parts of the country.

Presentations were prepared in an intelligible form. The Park of High Technologies tried to make sure that teachers were able to share their knowledge with colleagues after this forum.

Belarus was the first country in the world to legislatively regulate the technology of blockchain and operations with cryptocurrencies. The decree On the development of the digital economy will come into force in late March.

source:www.tvr.by