France, Germany Pull Back On Plans For Tax On US Digital Giants

Lloyd Doyle
November 9, 2018

(From left to right) European Commissioner for Economic and Financial Affairs, Taxation and Customs Pierre Moscovici, France's Finance Minister Bruno Le Maire, European Commissioner for Euro and Social Dialogue Valdis Dombrovskis and Spain's Finance Minister Nadia Calvino speak as they attend the Eurogroup Finance ministers meeting, in Brussels, on November 5. He added that Germany opposes aspects of the Commission's March digital services tax proposal concerning taxation of sales of data and the internet of things and would like to see the Commission proposal modified in this regard.

On Monday, Le Maire's German counterpart Olaf Scholz backed a European tax, but only if global moves in the the Organisation for Economic Co-operation and Development (OECD) had failed by 2020.

Governments also disagree on whether the tax should have a fixed expiration date or a review clause linked to global developments, assuming that it's implemented as an interim measure.

Arriving at a meeting of the 28 Finance ministers of the EU in Brussels, The Mayor told AFP: "the directive must be adopted by December 2018 at the last european Council of this year, but we are open to a postponement of the entry into force to allow time for the OECD to make a more complete proposal".

"There is no inconsistency with Mr. Scholz".

"We are aware there are some technical issues and technical concerns, but these are technical concerns not political problems, so we still have three or four weeks before the next Ecofin (a regular meeting between European Union finance ministers) to fix those technical issues", Le Maire said.

Paris claims the tax would be a vote-winner in next years European Parliament elections, which have been framed as a battleground between pro-EU and Eurosceptic parties. The plan requires all 28 states to approve the measure, but a large number now oppose it, anxious about the technical complexity of the process and that the U.S., where most of the firms are headquartered, would retaliate with changes to its own tax structure.

"We can not support the proposed directive ..."

US Treasury Secretary Steven Mnuchin, meanwhile, called for a global solution to the problem, warning against "unilateral action". Donohoe asked his fellow ministers in a public session. Britain has said it will go it alone with its own digital tax of 2 per cent.

The EU countries remain divided on a proposal from the European Commission to implement a new digital tax on larger online groups providing services such as advertising.

Le Maire says internet firms must be taxed now, and that the EU's digital tax will pressure the OECD to reach a global agreement more quickly.

Other reports by Iphone Fresh

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