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Taxing Digital Economy, ‘Inequality’ at Davos: Compliance

Jan. 24 (Bloomberg) -- The Organization for Economic Cooperation and Development, in an effort to ensure that multinational companies pay their taxes, says it will publish a proposal focused on the digital economy in the next two months.

The group, supported by 34 member countries including the U.S., U.K., Germany and Japan, aims to address issues raised by digital businesses in a world that taxes activities based on their physical locations.

In July. the group proposed developing rules during the next two years to prevent companies from avoiding taxes. The idea was endorsed by the Group of 20 major economies.

The rules would try to keep companies from taking interest deductions in one country without reporting taxable profits in another and would require disclosure to regulators of income from subsidiaries around the world.

A group of technology companies said in a letter to the OECD that officials shouldn’t propose separate rules for their industry. The group’s proposals are also being fought by some of its own member countries.

Compliance Action

Commonwealth Bank of Australia Curtails Multibank Chat Rooms

Commonwealth Bank of Australia followed global rivals including Goldman Sachs Group Inc. in restricting traders and dealers from using chat rooms as regulators probe alleged currency rigging.

Employees in its markets teams will be prohibited from using instant-messaging groups with counterparts at more than one bank starting this month, Peter Habib, a Sydney-based spokesman, said. He said the bank is “implementing best practices,” and declined to comment further.

Banks including JPMorgan Chase & Co. and Royal Bank of Scotland Group Plc are curtailing use of chat rooms after regulators used them in investigations into the manipulation of benchmark interest rates and currencies. Firms have also fired or suspended staff since Bloomberg News reported in June that some employees said they shared data about positions to try and rig a key gauge in the $5.3 trillion-a-day currency market.

Special Section: Davos Forum

Davos Makes Inequality Its Business as Political Backlash Seen

Reducing inequality is this year’s buzzword at the World Economic Forum at Davos.

Business and financial leaders are making the case that a reversal of the multi-decade trend is needed as much for business and economic interests as for social and moral reasons. Failure to narrow the gap risks robbing economies of demand and threatens banks and big businesses with political and regulatory backlashes if voters rebel at squeezed wages.

A poll of Bloomberg subscribers released this week found 58 percent view income disparity as a brake on economic growth, with 68 percent urging governments to confront the problem.

Income gaps can undermine economic demand and brew populist pressures on governments to protect voters, said Tim Adams, president of the Institute of International Finance, which represents more than 400 financial firms.

Lew Calls Bitcoin a Place to Hide, Shares Dimon’s ‘Incredulity’

The U.S. government needs more time to assess the Bitcoin “phenomenon” to ensure the virtual currency isn’t used for unlawful purposes, “like terrorist activities,” Treasury Secretary Jacob J. Lew said.

Lew, who leads the Obama administration’s efforts to fight illicit finance globally, said he discussed Bitcoin with JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon and shares a “certain incredulity” about it.

Lew made the remarks in an interview with CNBC yesterday at Davos.

Iran’s Rouhani Invites Oil Investment as Sanctions Eased

Hassan Rouhani, the first Iranian leader in a decade to visit Davos for the World Economic Forum, invited oil companies to invest in his country as a nuclear accord with world powers triggers the lifting of some sanctions.

Rouhani told a meeting of about 30 executives, mostly from the oil industry, that Iran has a good investment environment now and that risk is low, said Lin Boqiang, director of China Center for Energy Economics Research, who attended the meeting yesterday.

Iran, holder of the world’s fourth-largest proven oil reserves, saw its economy shrink more than 5 percent in the fiscal year through March under the weight of international sanctions.

For more, click here.

For more on the Davos Forum, click here.

To contact the reporter on this story: Carla Main in New York at cmain2@bloomberg.net

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net

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