Global digital tax talks to move forward
Global
digital tax talks to move forward
A group of 137 countries and jurisdictions agreed to move ahead with negotiations
to address tax challenges of the digital economy, according to a statement
released Friday by the Organization for Economic Cooperation
and Development (OECD).
The countries "affirm their
commitment to reach an agreement on a consensus-based solution by the end of
2020," the statement said. The statement followed talks among the
countries this week in Paris that were overseen by the OECD.
The multilateral negotiations
come as several European countries have been pursuing unilateral digital taxes
that would primarily affect major U.S. tech companies such as Facebook, Amazon
and Google. These countries are seeking to raise tax revenue from companies that
have many users in their jurisdictions but pay little in taxes there.
However, U.S. policymakers
oppose individual countries acting on their own to create digital taxes,
arguing that the taxes unfairly target American tech companies, and think the
best route would be an agreement on a framework at the OECD level.
After France enacted a digital
tax last year, the U.S. trade representative proposed tariffs on $2.4 billion
on French goods in response. The two countries earlier this month reached a
truce under which France will postpone collecting its tax until the end of the
year and the U.S. will postpone tariffs. Treasury Secretary Steven Mnuchin has also
warned the United Kingdom and Italy that they will face tariffs if they move
forward with digital taxes.
The OECD said that the countries
participating in the digital tax talks have agreed on an approach that will
form the basis of negotiations on "Pillar One" rules about where
taxes should be paid and how profits should be allocated.
Mnuchin proposed
in December that Pillar One be a "safe-harbor
regime," which would mean that companies could choose whether to opt into
it.
The statement released by the
OECD said that many other countries participating in the talks "express
concerns that implementing Pillar One on a ‘safe harbour’ basis could
raise major difficulties, increase uncertainty and fail to meet all of the
policy objectives of the overall process." The countries involved in
the talks won't make a decision about the safe-harbor issue until after other
elements of an agreement have been reached, the OECD said.
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