Push for global digital tax agreement stalls amid tensions
Several senior officials told POLITICO the stand-off between France and the US may have scuppered chances of reaching a deal on how to tax the digital world.
Hopes for a global deal to tax firms like Facebook and Google have been significantly scaled back | Denis Charlet/AFP via Getty Images
Hopes for a global deal to tax firms like Facebook and Google have been significantly scaled back ahead of a meeting later this month involving more than 130 countries, several senior officials told POLITICO.
The growing pessimism about overhauling how the digital economy is taxed comes as tensions mount between France and the United States over Paris' digital tax rules, which overwhelmingly target American tech firms.
Both countries are helping to lead digital tax negotiations at the Organisation for Economic Co-operation and Development (OECD), the Paris-based group of mostly rich Western countries.
Speaking on Tuesday, Bruno Le Maire, France's finance minister, said that he still hoped to reach a digital tax agreement within the OECD over the next two weeks, and that he would meet Steven Mnuchin, the U.S. Treasury secretary, in Davos, Switzerland, later this month to hammer out an agreement.
"We want to try all options to reach an agreement at the OECD in the next 15 days," said Le Maire, who spoke to Mnuchin on Monday about the ongoing dispute.
But the political stand-off between the U.S. and France over how to move forward with global digital taxation rules has soured hopes of reaching an initial agreement when more than 130 countries gather for a two-day meeting at the end of January.
Participants now hope to merely agree to continue discussions beyond January on how to proceed with the negotiations, according to the officials, who spoke on the condition of anonymity because they were not authorized to speak publicly.
Two officials said the chances of any agreement being reached before June — when the OECD's digital tax rules were expected to be finalized — now looked remote, if not impossible, if Paris and Washington went further down the path of a trade war.
Under the current OECD proposals, new rules would allow all countries to tax the digital operations of companies worldwide, beyond a certain threshold, and create a minimum level of tax that all firms must pay on their online activities.
Digital tax rhetoric
Doubts about reaching a global agreement on digital tax have been steadily growing.
U.S. officials have become increasingly vocal about the slew of domestic proposals from European countries to impose levies on the digital economy — efforts that have primarily focused on American tech giants like Apple and Amazon.
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