The United States is putting pressure on the EU to abandon the digital tax plan


The United States is pushing for pressure on the EU to abandon its plans for an imposition on digital companies, arguing that it could run into Brussels’ commitment to avoid new punitive taxes on businesses while negotiations for a global tax agreement.

The principles of the agreement were set out in an agreement by 130 countries to the OECD in Paris last week, after winning approvals from the G7 group of leading nations last month.

Other U.S. and EU officials will hold talks this week ahead of a meeting of G20 finance ministers on Friday; the fate of the digital lever proposed by the 27-member bloc is expected to participate heavily in the discussions. Janet Yellen, US Treasury Secretary, will then meet with Eurogroup members of their opposing numbers in Brussels early next week.

Yellen spoke to the vice-president of the European Commission for digital and competition policy, Margrethe Vestager, about the tax proposals on Tuesday, according to the commission, which she said was “a good and constructive first exchange”.

Other U.S. Treasury officials told reporters Tuesday that the EU’s digital withdrawal plan was probably inconsistent with the OECD and G7 agreements, though it would not be. possible to confirm whether it was compatible until a final agreement.

G20 finance ministers will review later this week and discuss preliminary agreements with OECD and G7 with a view to concluding the agreement is in time for a summit of G20 leaders in Italy in October, officials say.

But the EU’s plan to continue with its own digital tax already last month risks raising transatlantic tensions in the final stages of negotiations.

EU officials have emphasized that the proposal will not reflect the bloc’s 2018 plan for a tax targeting the world’s largest technology companies, but ultimately originated by opposition from smaller member states. . Instead, Brussels has said it will potentially target hundreds of companies with digital operations – rather than targeting specifically U.S. tech giants.

Valdis Dombrovskis, executive vice-president of the EU trade commission, said on Tuesday that work on the tax was “ongoing” and Brussels was confident it would not conflict with the OECD agreement.

“We have worked with our international partners to ensure that the implementation of the tax does not interfere with the process at the OECD where an important agreement has been reached. We see it as complementary which will cover a wide base of society, ”Dombrovskis said.

Senior US Treasury officials say they are aware that the EU is in a difficult political situation because it had promised to unveil its new digital tax from this month, in conjunction with the issuance of the collective debt to finance the measures. of coronavirus relief.

The commission wants to allocate the revenues from the digital levy – with an extension of its emissions trading scheme and its discussed carbon border regulation mechanism – to help reimburse the € 800 billion in loans it will accumulate to implement its recovery fund.

The commission is under strong pressure to move forward with the withdrawal from the European parliament, which has long argued that Brussels should develop its own sources of revenue.

Ursula von der Leyen, chairman of the commission, insisted last month that digital taxation is not in conflict with the international corporate tax proposal and that it would not result in businesses being taxed. twice for the same income.

However, it seemed to insinuate that the commission was ready to seek a compromise, based on the outcome of global fiscal discussions, suggesting that a “broader solution” could emerge in the OECD negotiations.

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