EU Postpones Digital Tax As Tax Negotiations Continue

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Other finance ministers cited the delay as another sign of progress.

“It is very, very good that we now take the next step by discussing how to implement this in the European Union and that the European Union has decided today not to present its proposal to the public,” said Olaf Scholz from Germany. the finance minister said as he entered the meeting.

The EU’s digital tax proposal faced a difficult path to become law in Europe, but the possibility of a new proposal that could be interpreted as a tax targeting American companies could be another distraction for fragile negotiations.

The United States has already resented other digital taxes imposed by countries like France, Italy and the UK apart from the new proposal. More than a dozen countries has enacted or announced plans to move forward with its own digital taxes in recent years.

The Biden administration has asked countries to immediately lower their digital taxes, and prepared retaliation tariffs on a wide range of European goods, including cheese, wine and clothing. As part of global tax negotiations, countries have sold their goods or services to the largest and most profitable multinationals with profit margins of at least 10 percent, even if they do not have a physical presence there.

France, Europe’s biggest digital tax advocate, declined to comment on Monday. France will commit to legally withdraw the digital services tax only after a deal comes into effect, which is unlikely to happen before 2023, finance minister Bruno Le Maire said at the weekend.

Yellen, speaking at Monday’s meeting, stressed the importance of the close relationship between the United States and the European Union and highlighted the importance of the global tax treaty she helped mediate. He argued that an agreement on the global minimum tax would help European countries make significant investments in their economies and reduce inequality.

“Long-term fiscal sustainability is critical, which is one of the reasons why we continue to work collectively to impose a global minimum tax of at least 15 percent, in line with the G20 commitment made a few days ago,” he said. said Yellen. “We hope that all EU member states will join the consensus and that the European Union will move forward on this issue at EU level.”

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