France Urges EU Digital Tax Rollout

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French finance minister says the European Union should ready its own digital tax plans in case OECD negotiations about global taxation of tech firms fail

The French Finance Minister Bruno Le Maire has risked upsetting US President Donald Trump this week with his latest intervention about a digital tax.

According to Reuters, Le Maire has on Wednesday suggested that the European Union should press ahead with plans for a bloc-wide digital tax, in case global talks at the OECD fail.

“We think that Europe should set the example,” Le Maire told reporters after an online meeting with his G20 counterparts, who reportedly gave their support to continuing the OECD talks until mid-2021.

OECD talks

In July this year the EU warned America once again it was prepared to propose new digital tax measures at the European level if the US did not resume negotiations on the matter with the Organisation for Economic Cooperation and Development (OECD).

The US had pulled out of OECD digital tax negotiations in June, citing a lack of progress.

Earlier negotiations at the EU level were put on hold in order to focus on the OECD talks.

The OECD had been organising and developing global reforms with nearly 140 countries, over where multinational firms should be taxed.

In the meantime, individual countries such as France have implemented measures of their own, but have drawn reprisals from the US.

The OECD had earlier this year warned the UK and other countries to hold off on its plans to introduce their own digital tax.

But Spain in June became the latest country to propose a levy of 3 percent on the local digital revenue of companies with annual global sales of more than 750 million euros.

Tax dispute

Tech companies have long been criticised by lawmakers for their tax practices that sees them reducing their tax bills by booking profits in low-tax countries (such as Ireland) regardless of the location of the end customer.

Plans for an EU-wide digital tax have previously failed upon the objections of certain countries, forcing member states, most notably France, to push ahead with their own national levies.

The US has already investigated France over its digital tax policy, which has already been passed by French lawmakers.

That dispute was settled when France offered to suspend its digital tax on tech companies’ income in France until the end of the year, while the OECD negotiated new rules for the cross-border taxation of big digital companies.

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Author: Tom Jowitt
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