European Commission Puts Digital Tax on Hold Until October

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The European Commission is suspending the preparation of its proposal for the introduction of a digital tax until October. With this decision, the Commission wants to provide ample scope for the completion of the international agreement on the taxation of multinationals.

 

Last weekend, the G20 finance ministers reached an agreement in principle on global tax reform. They agreed, among other things, on a minimum tax of fifteen percent for multinationals and a more balanced distribution of tax revenues based on the profits made in each country. The deal, described as historical, should be worked out in detail within the OECD by October.

The Commission has been brooding for years on a tax system to better tax the tech giants. Instead, she wants to use the income to help finance the European recovery plan. Later this month, the Commission wanted to put forward a proposal. Still, the completion of the agreement on the minimum tax for multinationals is now “the number one priority”, the spokesman said.

The European plan for a digital tax has been met with excellent resistance in the United States for years. Washington finds the plan discriminatory against American companies such as Google, Facebook and Amazon. This weekend, Finance Minister Janet Yellen launched a call from Venice to review those taxes.

According to Yellen, the G20 agreement on the taxation of multinationals means that all countries accept that existing digital taxes will be dismantled and that no more similar taxes will be introduced in the future. “It is now up to the European Commission and the EU Member States to decide the way forward,” she said from Italy. That country, like France and Spain, already has a national digital tax.

Yellen travelled on Monday to Brussels for consultations with her European counterparts. The US secretary advocated easing European fiscal rules to support the economic recovery after the corona crisis. “It is important that the Member States seriously consider taking additional fiscal measures to ensure a robust recovery at national and global levels,” Yellen said.

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