01/23/2020

U.S., EU Still Sorting Through Digital Tax Concerns

For now, the U.S. won't be taxing French goods

While international negotiators continue to seek agreement on a plan to rewrite how the digital economy is taxed, some participants remain skeptical that consensus can be reached from more than 130 countries by year’s end. The Organization for Economic Cooperation and Development (OECD) plan for a global minimum tax is focused on allocating more tax revenue from big tech companies and other multinationals to countries where those corporations have a large market presence. That means some countries are going to see more tax revenue under the plan than others. Just this week, three European Union countries – Estonia, the Czech Republic and Poland – asked for an exemption from parts of the plan.

The Czech Republic doesn’t accept the principal of a global minimum tax under any condition “because we still consider setting the level of taxation as a substantial element of national sovereignty and of fair tax competition,” a Czech Republic official told Bloomberg Tax.

Because most of the multinational companies that would be impacted are based in the U.S., the Trump administration has said the tax unfairly targets American companies like Apple, Amazon, Facebook and Google. Treasury Secretary Steven Mnuchin has requested changes in the OECD framework that would allow some American companies to opt out of those taxes. President Donald Trump has gone further to say that only the United States can tax American-based companies.

Digital tax feuds between American officials and counterparts in France and the U.K. have exacerbated the threat of trade wars between traditional allies, although the U.S. and France reached an agreement this week at the World Economic Forum in Davos to suspend France’s proposed 3 percent tax on multinationals’ revenues from digital services to French users in exchange for an end to U.S. threats to impose tariffs on French goods.

This article was provided to OSAE by the Power of A and ASAE's Inroads.