US withdraws from OECD talks on digital tax

19 Jun 20

Global talks aimed at creating an international tax system able to deal with huge multinational digital companies such as Facebook and Amazon will continue without the US, after it pulled out of negotiations.

 

The process, run by the OECD and involving more than 130 countries, was set up to solve the perceived problem of such businesses paying little to no tax in many of the countries where they operate.

US officials have repeatedly called digital taxes “discriminatory”, because US companies are over-represented at the top of the sector, and when countries have set up unilateral digital services taxes they have threatened to introduce retaliatory tariffs on trade.

“Absent a multilateral solution, more countries will take unilateral measures and those that have them already may no longer continue to hold them back,” said OECD general-secretary Angel Gurría.

“This, in turn, would trigger tax disputes and, inevitably, heightened trade tensions. A trade war, especially at this point in time when the world economy is going through a historic downturn, would hurt the economy, jobs and confidence even further.”

US treasury secretary Stephen Mnuchin blamed a lack of progress for the exit in a letter to EU officials.

French finance minister Bruno Le Maire called the US letter “a provocation” because a deal is “centimetres away”, and said a digital tax would be levied in France this year regardless of the outcome of the talks.

The OECD process was seen as an opportunity to reach an agreement with the US that was fair on other – especially developing – countries.

“Developing countries’ historical commitment to multilateralism is evident in their continued engagement in the OECD process,” said Irene Ovonji-Odida, commissioner of campaign organisation the Independent Commission for the Reform of International Corporate Taxation.

“The world urgently needs leadership and renewed engagement from big powers to drive international cooperation that is genuinely inclusive, fair towards all countries including developing countries, and resolves challenges affecting people and planet.”


Read our in-depth article from May: Tariff time for GAFA giants? 

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