US-European understandings on digital tax
Withdrawal of punitive fees after settlement with 5 countries
Saturday – 17 Rabi’ al-Awwal 1443 AH – 23 October 2021 AD Issue No. [
The US Treasury announced that it had reached an agreement with 5 European countries to cancel the digital services tax (Reuters)
Washington: Asharq Al-Awsat.
Under the joint agreement, these countries will eliminate the controversial tax that affects giant tech companies once the minimum tax on global companies comes into effect, likely expected in 2023. These countries agreed to transfer money paid for digital services tax during the transition period to future tax accounts, and noted In a joint statement, “this settlement represents a practical solution.”
The United States demanded the immediate abolition of what it considered discriminatory taxes imposed on giant American technology companies such as “Amazon”, “Apple” and “Google”, while European countries preferred to wait until the new tax system was implemented.
In a statement, US Trade Representative Catherine Taye welcomed the agreement, saying: “We have reached an agreement in conjunction with the historic agreement of the Organization for Economic Cooperation and Development that will help end competition over taxation for multinational corporations.”
Early this month, about 140 countries reached an agreement on setting a minimum tax under the auspices of the Organization for Economic Cooperation and Development, with the aim of putting an end to tax havens. The agreement stipulates that countries place a minimum tax of 15 percent on large multinational corporations, regardless of where they are located. This is a sweeping overhaul of existing rules that have long been criticized for encouraging tax evasion. The reform is scheduled to enter into force by 2023 at the latest.
Washington had announced punitive duties of 25 percent on products from several countries in response to the digital tax, but they were never collected as US officials sought a broader agreement.
British Finance Minister Rishi Sunak said Thursday’s agreement provides for a transition period for the digital services tax. “This agreement means that our digital services tax is protected as we move into 2023, so its revenue can continue to fund vital public services,” he added in a statement.