• Kyodo

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Finance chiefs from the Group of 20 major economies will approve in early June a plan to create global tax rules covering digital giants, including Google LLC and Facebook Inc., based more on where they make their sales rather than where their permanent offices are located, Japanese officials said Friday.

The G20 finance ministers and central bank governors will endorse a plan to be submitted by the Organisation for Economic Cooperation and Development, which seeks an agreement by the end of 2020 on the new tax scheme, when they meet in the city of Fukuoka for a two-day meeting from June 8.

But it remains to be seen whether the Paris-based organization can find common ground by the target time due to conflicting opinions over how to collect taxes from global companies and distribute them in the digital era.

The issue has drawn attention amid claims multinational companies are not paying their fair share of tax. Currently, taxation of a foreign company in principle depends on whether it has permanent facilities, including branches and factories.

At the request of the G20, the OECD has studied ways to impose more levies on multinational firms, in particular U.S. IT giants Google, Apple Inc., Facebook and Amazon.com Inc., collectively known as GAFA.

The OECD will submit to the G20 finance meeting a set of proposals to review international tax rules. The finance chiefs will also look at the key issue of how to prevent multinational companies from massively shifting their profits to entities subject to no or very low taxation.

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