Under US pressure, European Union suspends digital tax plan

The European Commission said on Monday that it would postpone plans to propose a digital tax in the European Union so as not to hamper efforts to reach a global agreement on a minimum tax.

“We have decided to suspend our work on a digital tax proposal,” said an EU spokesperson, a day after Washington asked Brussels to delay its tax plan following an “extraordinary breakthrough “in the 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 resolve the remaining issues and finalize the deal by October.

priority

G20 finance ministers agreed on the outcome of negotiations led by the Organization for Economic Co-operation and Development (OECD) for a minimum overall corporate tax rate of at least 15%, allowing countries to tax a share of the profits of larger 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 the European Commissioner for Economic Affairs Paolo Gentiloni.

“It is very important that after this crisis there is an important agreement on this issue”, he added at the end of a meeting between the finance ministers of the European Union and the American secretary to the Treasure Janet Yellen.

It affects thousands of businesses

The European Commission has insisted its new tax plan, 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 affect thousands of businesses , including European.

The money collected through digital taxes is intended to help finance the post-pandemic recovery plan of 750 billion euros.

Three EU countries – including Ireland, which has become a European base for a multitude of American companies thanks to low tax rates – have yet to sign the OECD agreement.

The main lobby of large Brussels technology companies, the Federation of the Computing and Communications Industry, welcomed the delay in the European tax which “threatens to derail international efforts”.

“We urge all countries to immediately abolish unilateral digital taxes, as planned in the global framework,” added Christian Burgreen, vice-president of the Federation.