September 27, 2021

Under pressure from Washington, Brussels suspends its digital tax project

The European Union announced on Monday July 12 the freezing of its digital tax project, which Washington disapproved of.

‘The success of this process will require a final push from all parties, and the Commission is committed to focusing on this effort. That is why we have decided to pause our work on a digital tax proposal, ‘said a Commission spokesperson.

The EU’s digital tax bill was one of the new resources planned to finance its € 750 billion stimulus package. Although it has not yet been made public, the European Commission had repeatedly stressed that this project would comply with the OECD agreements and that it would affect thousands of companies, including European ones.

But it drew American criticism. Washington considers this project discriminatory for American technology champions like Amazon, Google or Facebook. Treasury Secretary Janet Yellen, present in Brussels on Monday for a meeting with European finance ministers (Eurogroup), called on the EU on Sunday to reconsider it.

Taxes deemed discriminatory by the United States

G20 finance ministers on Saturday approved a reform deemed ‘revolutionary’ which aims to end tax havens. In particular, it plans to introduce a world tax of at least 15% on the profits of the largest international firms and to distribute the rights to tax these companies more equitably. The details of this reform must still be negotiated until October within the framework of the OECD for implementation from 2023.

The agreement approved by the G20 on Saturday ‘calls on countries to agree to dismantle existing digital taxes that the United States considers discriminatory and to refrain from instituting similar measures in the future,’ Janet Yellen said on Sunday. in front of the press, on the sidelines of the G20 in Venice. ‘It is therefore up to the European Commission and the members of the European Union to decide on the way forward,’ she said.

The agreement reached at the G20 has sparked enthusiastic reactions, including in Brussels. ‘A bold step has been taken that few would have thought possible just a few months ago. It is a victory for tax fairness, for social justice and for the multilateral system, ‘said the European Commissioner for the Economy, Paolo Gentiloni, on Saturday. ‘But our work is not done. We have until October to finalize this agreement, ‘he warned.