US Treasury chief urges EU to rethink its digital tax levy

THE US Treasury secretary has urged European policymakers to rethink their proposed Eu-wide digital tax that would target the likes of Amazon and Google.

Steven Mnuchin said the tax would “unfairly” penalise US technology companies. “We believe the issues are not unique to technology companies but also relate to other companies, particularly those with valuable intangibles,” he said.

The European Commission has repeatedly called for technology companies to pay a 3pc tax on digital sales and services, regardless of their bricksand-mortar presence in a country.

If the motion passes, the levy could generate around €5bn (£4.4bn) by raising tax rates for about 120 of the biggest technology companies.

Mr Mnuchin said: “We urge our partners to finish the Organisation for Economic Co-operation and Development process with us rather than taking unilateral action in this area.”

His comments come as plans to tax digital companies were pushed forward by French finance minister Bruno Le Maire, who this week told EU countries they must reach an agreement on the measures by the end of this year.

“The question we have to ask ourselves today is whether Europe is in front or whether it is behind, whether it is inventing or whether it deals with it, whether it is defending its values or whether it accepts those of others,” Mr Le Maire said.

The US Senate previously lambasted EU plans. In a letter to European Council president Donald Tusk and Commission president Jean-claude Juncker, the US Senate committee on finance urged them instead to focus on reaching a consensus with other economies for a global solution.

“The EU already has a revenue tax based on the location of the customer – the VAT. Consequently, the digital services tax will undoubtedly lead to double taxation of multinational companies,” the letter signed by senators Orrin Hatch and Ron Wyden stated.

They also questioned the EU’S ability to enforce this tax on companies that do not have a physical presence in the EU and pointed at Chinese companies that might fall outside the proposed scope.

Facebook, Google, Amazon, Uber, Airbnb and other large technology firms – typically from the US – are among the most high-profile firms that face the tax.

“By forcing these burdens largely on US companies, the EU would be erecting another deeply concerning barrier to transatlantic trade,” they said.