Under US pressure, the European Union suspends the digital tax plan

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The European Commission said on Monday it would delay its plan to propose a digital tax in the European Union in order not to hamper efforts to secure a global deal on Imposing a minimum tax.

“We have decided to suspend our work on a digital tax proposal,” an EU spokesman said, a day after Washington asked Brussels to delay its tax plan following an “extraordinary” breakthrough in G20 talks on Saturday.

G20 finance ministers meeting in Venice on Saturday approved a plan endorsed by 132 countries to reform the way multinational corporations, including digital giants, are taxed in the United States.

The G20 called on negotiators to quickly address the remaining issues and finalize the agreement by October.

top priority

G20 finance ministers agreed on the outcome of negotiations by the Organization for Economic Cooperation and Development (OECD) for a global minimum corporate tax rate of at least 15%, allowing countries to tax a share of the profits of the world’s largest companies regardless of their headquarters.

“What is clear to us is that (the OECD agreement) is a top priority and that is also why we have decided to postpone our proposal on the digital tax,” said EU Commissioner for Economic Affairs Paolo Gentiloni.

“It is very important that after this crisis there is an important agreement on this issue,” he added after a meeting between European Union finance ministers and US Treasury Secretary Janet Yellen.

It affects thousands of companies

The European Commission insisted that its new tax plan, which was due to be unveiled later this month, would be in line with what was agreed at the Organization for Economic Co-operation and Development and would affect thousands of businesses, including European ones.

The money raised from digital taxes is intended to help pay for the €750 billion post-pandemic recovery plan.

Three countries in the European Union – including Ireland, which has become a European base for a handful of US companies thanks to low tax rates – have not yet signed the OECD agreement.

The main lobby of Brussels’ big tech companies, the Federation of the Computer and Communications Industry, welcomed the delay in the EU tax that “threatens to derail international efforts”.

“We urge all countries to immediately abolish unilateral digital taxes, as expected in the global framework,” added Christian Burgreen, Vice President of the Federation.





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