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The United States is accumulating pressure on the EU to drop its plans for a tax on digital businesses, arguing that it could clash with Brussels’ promise to avoid new punitive corporate taxes while negotiations on a global tax agreement.
The principles of the agreement were set out in an agreement of 130 OECD countries in Paris last week, after get approval of the G7 group of major nations last month.
Senior US and EU officials will hold talks this week ahead of a G20 finance ministers meeting on Friday in Venice; the fate of the digital rate proposed by the 27-member bloc is expected to appear heavily in the debates. Janet Yellen, secretary of the United States Treasury, will then meet with members of the Eurogroup group of their opposing numbers in Brussels early next week.
Yellen spoke Tuesday with European Commission Vice-President for Digital and Competition Policy Margrethe Vestager about the tax proposals, according to the commission, which she said was “a good and constructive first exchange”.
Senior US Treasury officials told reporters on Tuesday that the EU’s digital tax plan was likely incompatible with the OECD and G7 agreement, although it would not be possible to confirm whether it was compatible until reached a final agreement.
G20 finance ministers will review and discuss at the end of this week the preliminary agreements reached in the OECD and the G7, with the aim of concluding the agreement in time for a summit of G20 leaders in Italy in October, officials said.
But the EU’s plan to continue with its own digital imposition already this month risks raising transatlantic tensions in the final stretch of negotiations.
EU officials have stressed that the proposal will not reflect the bloc’s 2018 plan for a tax targeting the world’s largest technology companies, but which ultimately came about due to opposition from more member states. small. Instead, Brussels has said it will potentially target hundreds of companies with digital operations, rather than specifically targeting US technology giants.
Valdis Dombrovskis, executive vice president of trade for the EU commission, said on Tuesday that work on the rate was “ongoing” and Brussels was confident it would not conflict with the OECD agreement.
“We are working with our international partners to ensure that the deployment of the rate does not interfere with the OECD process where an important agreement has been reached. We see it as complementary, as it will cover a broad base of companies, “Dombrovskis said.
Senior U.S. Treasury officials say they are aware that the EU is in a difficult political situation because it had pledged to file its new digital tax earlier this month, along with the issuance of collective debt for fund coronavirus relief measures.
The commission wants to allocate the revenue from the digital tax, along with an extension of its emissions trading scheme and its carbon border adjustment mechanism discussed, to help amortize the 800 billion euros it will accumulate to implement your recovery fund.
The commission is under strong pressure to push through the European Parliament’s rate, which has long argued that Brussels should develop its own sources of revenue.
Ursula von der Leyen, chairwoman of the commission, insisted last month that the digital tax would not conflict with the international corporate tax proposal and that it would not result in companies being taxed twice for the same income.
However, it seemed to imply that the commission was willing to seek a compromise, depending on the outcome of global fiscal talks, suggesting that a “broader solution” could emerge in the OECD negotiations.
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