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Treasury Secretary Janet Yellen said on Friday that regulators had agreed to eliminate a controversial part of the U.S. government’s plan to reform global digital tax rules, paving the way for a faster deal.
What is happening: Yellen told G20 finance ministers the United States will drop a “safe harbor” provision the Trump administration has been fighting for, which would have essentially allowed tech companies to opt out of any new tax regime, reports the FT.
Why is this important: This indicates that Washington is ready to make progress on an international digital tax deal, which the Trump administration has failed to achieve.
The context: Countries around the world, including France, have attempted to establish digital taxes, which typically target US tech giants who make money from international users.
- The effort has also accelerated in the United States – Maryland has just become the first state to adopt a tax on digital advertising.
- The business and tech communities watched to see how the Biden administration would approach this issue. The process is moving slowly and European countries are eager to push their tariffs forward.
What they say: Tech companies want a global digital tax deal, saying they’re happy to pay their share of the tariff, but it should be uniform.
- “As the global economy seeks to recover from the global pandemic and governments face new fiscal pressures, an agreed solution is needed more than ever to ensure a sustainable framework for cross-border trade and investment,” Google Vice President of Government Affairs and Public Policy said Karan Bhatia wrote in a blog post Thursday.
And after: Countries will continue to try to reach an agreement within the Organization for Economic Co-operation and Development, where negotiations have taken place.
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