Attempts to create a global framework for imposing digital tax on technology companies such as Google, Facebook and Amazon are being continued by the European Union and the United Kingdom despite the United States walking out of the negotiations for the same this week.
The US feels that the proposed taxes on digital services to be unfair. According to calculations in the UK, such a tax can generate as much as up to £400m annually for the country’s exchequer. The US has instead threatened to impose retaliatory tariffs on products from British car exports to French champagne and cheese of the EU and the UK imposes such a tax which will be applicable for large tech companies and most of them are form the US.
“We have always been clear that our preference is for a global solution to the tax challenges posed by digitalisation,” said a spokesman for the UK Treasury. “We will continue to work with our international partners to achieve that objective.”
Alleging that the talks had not made any progress, the US Treasury secretary, Steven Mnuchin, withdrew from the talks with EU officials on Wednesday.
The negotiations have been organized by the Organisation for Economic Cooperation and Development (OECD) with the aim of bringing in global tax rules into the digital era and about 140 countries are currently involved in the negotiation process. The talks aimed to come to a conclusion and universal agreement by the end of the current year but that timeline seems more or less unreachable at the moment because of the withdrawal of the US form the talks and he impending Presidential elections in the US in November.
There has been a joint response to the letter from Mnuchin pulling out of the talks by France, Britain, Italy and Spain, said Bruno Le Maire, the French finance minister. “This letter is a provocation. It’s a provocation towards all the partners at the OECD when we were centimetres away from a deal on the taxation of digital giants,” Le Maire said in a radio interview. .
“Any type of threat from another country” over the efforts to introduce a digital services tax would not be accepted by European countries, said a spokesman for the Spanish government.
In the absence of an OECD-led international deal, there has been efforts by individual countries to impose digital taxes on tech companies of the their own and these moves have been opposed by the US.
Implementing its own digital services tax would be considered by Europe if there was no agreement reached on an internationally acceptable tax regime by the end of the current year, said the European commission. “The European commission wants a global solution to bring corporate taxation into the 21st century,” said Paolo Gentiloni, European commissioner for the economy. “But if that proves impossible this year, we have been clear that we will come forward with a new proposal at EU level.”
(Adapted form TheGuardian.com)