US dashes hopes of global deal on digital tax
US officials have reportedly suspended talks with European countries over plans for a global digital tax framework, and continue to threaten to impose sanctions should they go ahead with individual proposals.
US treasury secretary Steven Mnuchin last week told four European finance ministers that discussions had reached an “impasse”, in a letter seen by the Financial Times.
He added that Washington would be unable to agree even on a temporary basis to current proposals for a universal digital services tax by the OECD.
Retaliatory measures from the US against European countries for going ahead with their own taxes on leading technology companies will stir up tensions on either side of the Atlantic, as governments seek fresh funding to cope with the impact of coronavirus.
The UK and France have led the way with independent digital services tax proposals, and plan to implement them unless a global solution is found.
The letter was reportedly sent to chancellor Rishi Sunak and French finance minister Bruno Le Maire, alongside the finance ministers of Spain and Italy.
The United States remains opposed to digital services taxes and similar unilateral measures,” Mnuchin is said to have written.
“As we have repeatedly said, if countries choose to collect or adopt such taxes, the United States will respond with appropriate commensurate measures.”
Washington has argued that the current proposal for a global tax structure aimed at technology companies unfairly targets those based on its own soil, such as Apple, Google and Facebook.
A plan by the OECD which would see a global minimum corporation tax implemented has become a bone of contention in the discussions, as it would prevent companies from moving their headquarters to low tax regions to avoid paying higher rates elsewhere.
US trade representative Robert Lighthizer announced an inquiry last month into whether digital services tax proposals in the UK, France and elsewhere amount to an unfair trade practice.
It has so far held off from imposing any levies on other countries, despite multiple threats to do so.
The US Treasury did not immediately respond to a request for comment.