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The EU “should be willing to act alone” by 2020 even if there’s no global agreement on digital tax reform, said Margrethe Vestager, the commission’s incoming vice-president, who will be in charge of digital policy and competition for the bloc. Paolo Gentiloni, Europe’s commissioner-designate for taxation, said he would try to keep individual EU countries from vetoing such a move. (Reuters)

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Talking point: The warning comes after France became the first EU member to impose a digital levy on foreign digital companies’ revenues. France went ahead with the tax despite threats of retaliation from the U.S., where President Donald Trump argued it unfairly targeted U.S. firms—a sentiment echoed by the heads of Google and Amazon—and threatened to slap a duty on French wine. The two countries have since reached a compromise, and in August, they pledged to take leading roles in an OECD task force that is expected to propose a global framework for taxing companies that generate revenue in a nation without having a physical presence there. In March, European finance ministers scrapped a plan for an EU-wide digital tax following objections from a handful of member states—including Ireland and Scandinavian countries—that preferred to work towards an international consensus. The comments from Vestager and Gentiloni suggest Europe will keep the pressure on the U.S. for an agreement.

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Vestager will also oversee Europe’s digital policy with the new title “executive vice-president, Europe fit for the digital age.” The new commissioner will take office on November 1, pending approval by the European Parliament. (The Logic)

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Talking point: A two-term run is almost unheard of for EU competition commissioners—the only person who has served in this position for a comparable period was Hans von der Groeben, from 1958 to 1967; the position was established at the beginning of his term. Holding onto the position will allow Vestager, who has repeatedly challenged tech giants, to continue spearheading her ongoing investigations, including her probes of Facebook’s Libra digital coin and Amazon’s business practices. Her new role as executive-vice president for digital will also afford her new authority, as she will now be in charge of the commission’s policies on cybersecurity, industrial and big data, as well as Europe’s taxation of tech giants. Bringing competition and data regulation together under one position is unprecedented.

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Non-Canadian companies produced about 16 per cent of total oilsands production this year, as compared to 33 per cent in 2014 and 22 per cent in 2010. (Canadian Press)

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Talking point: Alberta’s oilsands have been bleeding foreign money since the 2014 crash in global oil prices; that’s thanks to a combination of increased taxation and stricter regulation, including a lower methane cap introduced by the federal government in 2018. Mounting legal challenges to new pipelines—like Keystone XL and Enbridge’s expansion of its Line 3 pipeline—have also discouraged foreign investors; U.S. companies alone have divested over US$30 billion dollars in the past three years. But ownership of foreign assets has mostly been transferred to Canadian companies, increasing their footprint in the global market. Earlier in 2019, Oklahoma-based firm Devon sold its Jackfish thermal oilsands project to Calgary-based Canadian Natural Resources for $3.8 billion. That deal made Canadian Natural Resources one of the world’s largest oil firms. And, while foreign capital marches out, Canada’s overall exports of energy products are up. Alberta’s oil capital exodus stands in stark contrast to Canada’s overall foreign direct investment rate, which reached $18.7 billion in the second quarter of 2019—its highest level since the beginning of 2015.

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The company paid its advertising revenues earned in Japan to its branch in Ireland—where the corporate tax rate is 12.5 per cent compared to Japan’s 30 per cent—a violation of Japan’s tax laws. Facebook has since remitted more than 150 million yen (about $1.3 million) in taxes and penalties to rectify the violation, which occurred over two years from 2015 and 2017. Facebook said the company is “cooperating with taxation authorities to comply with legal regulations in each country.” (Japan Times)

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Talking point: Many countries, including Canada, do not require Facebook to collect and remit taxes in the country where digital sales are made. While Japan does require this, its tax authorities have expressed difficulties in keeping the social media company and other tech giants compliant. In January, Japanese tax authorities found that Google failed to declare about US$32 million in income earned in the country in 2015 by transferring it to Singapore. There’s a growing international push to tax digital companies, as well as standardize those taxes so companies can’t park revenues from one country in another that has lower tax rates. The OECD, for example, plans to create a global tax for foreign-based tech companies that all member states, including Ireland, will implement simultaneously. The OECD is aiming to have a draft of the law complete by the end of 2020.

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The European Future Fund, a proposed sovereign wealth fund, would be financed by member states to invest in “high-potential European companies.” The draft plan cites Europe’s dearth of tech giants compared to global competitors, naming Google, Apple, Facebook and Amazon in the U.S., and Baidu, Alibaba and Tencent in China. (Politico)

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Talking point: The EU and some individual European countries have been at the forefront of regulating tech companies by strengthening data privacy, antitrust and taxation. Measures like the General Data Protection Regulation; France’s three per cent digital tax on Big Tech companies; and fines for anticompetitive conduct are one way to place limits on foreign firms’ dominance in the region. Bolstering local companies through investments is another. The Future Fund will need support from all 28 member countries, however, and that’s not a given. Many members, including France and Germany, have supported the idea of loosening rules that limit state aid for R&D and competition laws for companies in the union. Others, including the Netherlands, have been reluctant to “pick winners” to compete with foreign rivals.

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The ministers will discuss a proposal from the OECD that would tax companies based on where they make sales, rather than where they’re headquartered. It also suggests that if companies pay below a minimum level of tax on their global earnings, individual countries will be able to levy them for the difference. (Quartz)

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Talking point: Big Tech firms are the main targets of the tax proposals, since they often build products in a few countries where most of their employees are based—typically the U.S.—and then sell them around the world. Emerging economies, where online platforms have millions of users and consumers but limited assets, are pushing particularly hard for changes to the taxation system. In April, India released a paper proposing to tax multinationals on their local economic activity, regardless of how international negotiations turn out. Other governments and the tech giants are likely to take this threat by India to move forward on its own seriously, because of the country’s track record of regulating Big Tech. In February, India imposed new e-commerce rules favouring local firms over the objections of Amazon and Walmart.