The World in 2020

Working through the tech-tax tangle

A global tax deal fit for the modern economy is within reach

It might just be the year that the international tax system is at last dragged into the 21st century. The summer of 2020 is the deadline by which negotiators tasked with working out how to tax multinationals that sell digital services—the backbone of the modern economy, from Amazon to Zoom—are supposed to agree on a solution acceptable to the world’s major economies. All being well, this would be approved by the G20 countries soon after. 

Technocrats, led by a team from the OECD, are hard at work, and are optimistic that a deal can be struck—if not by the ambitious target date, then within a year or so of it. The bosses of global companies should hope so: the alternative to multilateralism is a tax free-for-all that leaves them facing confusing and costly piles of overlapping tax bills.

The global framework for taxing international companies, based largely on thousands of bilateral treaties, has been creaking for decades. It was designed for the age of…