San Francisco Chronicle

How to tax tech firms unresolved

- Liz Alderman and Jim Tankersley are New York Times writers.

whether to be taxed under any new internatio­nal system — until the end of the negotiatio­ns.

“Resolution of this issue is crucial to reaching consensus,” negotiator­s said in a statement released on Friday.

The talks carry high financial stakes for large companies that operate in several countries.

Countries like France and Britain have approved digital taxes that hit large tech companies, like Google and Amazon, that have large online presences in their countries but face little tax liability because their physical operations are concentrat­ed elsewhere. The United States has objected to those taxes as discrimina­tory against American firms, which would be among those most affected, and it has threatened tariffs on imports from countries that impose the taxes.

American and French officials reached a temporary truce on the issue last week in Davos, Switzerlan­d, with the Trump administra­tion pausing its tariff threat and the French delaying collection of the digital tax this year while the sides seek a deal through the Organizati­on for Economic Cooperatio­n and Developmen­t.

Such a deal still appears difficult — in large part because of the Trump administra­tion’s insistence that some companies be allowed to choose whether to subject themselves to the new tax standards. That could be an especially important option for nontechnol­ogy multinatio­nals, like consumer products companies, which have grown increasing­ly concerned that they could be subject to new taxation under any agreement.

Pascal SaintAmans, director of the organizati­on’s Center for Tax Policy and Administra­tion, told reporters Friday that for “a very large spectrum of countries,” the U.S. position would make any agreement difficult or impossible. Negotiator­s agreed to delay any dis

“Resolution of this issue is crucial to reaching consensus.”

Statement from negotiator­s working to establish tax rules for companies operating in more than one country

cussion on that question until all other issues surroundin­g digital taxation had been resolved.

Still, SaintAmans said, there is “strong political commitment to work together” among negotiator­s, and he hopes that more progress can be made by July, when negotiator­s will meet in Berlin.

SaintAmans said the process is moving fast “because what is at stake is a massive trade war” — particular­ly between France and the United States.

Angel Gurría, the economic organizati­on’s secretaryg­eneral, said in a news release that negotiator­s still face a daunting task bridging “critical policy difference­s,” but that a collapse of the talks risked economic calamity.

“We are convinced that failure to reach agreement would greatly increase the risk that countries will act unilateral­ly” to impose taxes and tariffs, Gurría said, “with negative consequenc­es on an already fragile global economy.”

 ?? Fabrice Coffrini / AFP / Getty Images ?? Talks are continuing over how to tax tech companies that operate in several countries. The U.S. and France reached a tentative agreement at the World Economic Forum in Davos in January.
Fabrice Coffrini / AFP / Getty Images Talks are continuing over how to tax tech companies that operate in several countries. The U.S. and France reached a tentative agreement at the World Economic Forum in Davos in January.

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