Breaking News
0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

U.S. Presses Europe to Reconsider Plans for New Digital Tax

BrexitJul 06, 2021 18:18
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
2/2 © Bloomberg. Packages sit on a conveyor belt at an Amazon.com Inc. fulfilment center in Kegworth, U.K., on Monday, Oct. 12, 2020. Prime Day, a two-day shopping event Amazon unveiled in 2015 to boost sales during the summer lull, usually occurs in July, but this year got pushed to Oct. 13 in 19 countries, including Brazil, with over 1 million products for sale worldwide. 2/2

(Bloomberg) -- The U.S. is pressing European officials to reconsider plans to enact a new digital tax across its 27 members in a dispute that threatens to undermine significant progress made recently toward a global corporate-tax agreement.

Ahead of this week’s meeting in Venice among finance ministers from the Group of 20 economies, U.S. Treasury Department officials indicated in a call with reporters Tuesday that a potential digital-tax proposal might fall afoul of a deal struck last week that aims to eliminate so-called digital service taxes. The U.S. believes such taxes discriminate against U.S. companies.

Treasury officials on Tuesday’s call acknowledged that European officials are under political pressure not to abandon plans to tax tech giants. They said that while EU officials see the new measure as complying with the international agreement, the U.S. officials emphasized that it’s impossible to know if it will be compatible until the full text of a broader accord is reached, which is targeted for October.

Treasury Secretary Janet Yellen was scheduled to speak Tuesday with Margrethe Vestager, the EU’s executive vice-president for digital issues, according to Vestager’s online calendar. Vestager was due to propose a new EU tax on technology companies’ revenues on July 20, a week later than planned, according to a document seen by Bloomberg News.

Read more: EU and U.S. to Discuss Digital Tax Ahead of Bloc’s Levy Plan

In a deal brokered at the Organization for Economic Cooperation and Development, 130 countries and jurisdictions last week endorsed a plan to set a minimum rate for corporations along with rules to share the spoils from multinational firms. The latter portion is meant to deal with companies like Facebook Inc (NASDAQ:FB). and Amazon.com Inc (NASDAQ:AMZN)., which garner much of their business through cross-border digital commerce. That agreement comes with a deal on repealing existing laws -- and preventing new laws -- that attempt to tax cross-border digital sales.

In the briefing, Treasury officials also answered questions about how U.S. domestic politics represent a hurdle for the nascent global agreement. One official said the portion of the deal agreeing to a redistribution of corporate taxes based on where companies do business -- not just where they have headquarters -- would require a multilateral treaty.

The U.S. Constitution requires international treaties struck by a president receive a two-thirds majority for approval in the Senate, which may represent a significant challenge given President Joe Biden’s Democrats make up just half the chamber.

Treasury officials said the U.S. proposal that led to the tax-redistribution deal was designed to appeal to lawmakers from both parties, as it avoided a focus on only digital companies or targeting U.S. business. The Treasury has also claimed the U.S. will not lose tax revenue in the deal.

Following the announcement of last week’s OECD agreement, Kevin Brady of Texas, the senior Republican on the House Ways and Means Committee, set the tone of his party’s response when he issued a statement calling the deal a “dangerous economic surrender.”

Separately, regarding the International Monetary Fund’s plans to create $650 billion of new reserves, Treasury officials said the U.S. supports alternative methods for channeling so-called special drawing rights to needy countries, including a proposal for a new trust.

The G-20 meeting is also expected to focus renewed attention among rich countries on the economic recovery from the Covid-19 pandemic, as well as on efforts to continue containing the virus.

An official said Yellen will urge other countries that it’s not yet time to withdraw fiscal support for measures aimed at fighting the virus and its economic impact.

(Updates with details from Treasury starting in sixth paragraph.)

©2021 Bloomberg L.P.

U.S. Presses Europe to Reconsider Plans for New Digital Tax
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email