US drops demands that blocked new deal for taxing tech giants
A GLOBAL deal on taxing tech giants has inched closer after the US unblocked talks yesterday.
According to the French and German finance ministers, US treasury Secretary Janet Yellen has dropped a key US demand which had stalled international talks since 2019.
She made the announcement at a meeting of G20 finance ministers yesterday.
French finance minister Bruno Le Maire, who was at the meeting, said on Twitter that he was “happy to hear” Ms Yellen’s announcement.
“It’s a major advance. An international agreement on minimum taxation for companies and taxation of digital services is within reach.”
Ms Yellen has apparently dropped a so-called ‘Safe Harbour’ requirement, which would have allowed the US to opt out of any future deal.
“The stance of the old US administration is being abandoned, that these rules should be optional,” German Finance Minister Olaf Scholz told Bloomberg in an emailed statement.
“Today we saw a strong tailwind for a fair taxation of the large digital corporations. My US colleague Janet Yellen declared today at the G20 finance ministers that the USA will join in.”
EU economy and tax commissioner, Paolo Gentiloni, believes “it’s a very encouraging development” according to his spokesman.
The EU is pressing ahead with plans for its own digital levy, which it intends to table by June this year.
The bloc fears that the proliferation of national levies could undermine the single market.
France, Spain and Italy have imposed digital levies of 3pc, Poland has a 1.5pc tax on streaming services, while Austria’s 5pc tax is levied on online advertising only.
Several other EU countries, including Belgium, Czechia, Hungary and Poland, have also announced measures.
The UK introduced a 2pc levy on the revenues earned by tech giants on its territory last year.
Talks on taxing tech giants are being steered by the Organisation for Economic Cooperation and Development (OECD), which is working on profit shifting by multinationals and on ensuring a minimum level of corporate taxation.
The OECD has set a summer 2021 deadline for the 135 countries participating in the talks to reach a deal.