On the evening of Wednesday 20 December, the European Commission announced that it would “reflect on all possible measures that may need to be taken” if the planned American tax reform enters into force as voted through that day, according to a Commission spokesperson.
Europeans tried to warn their American allies against certain provisions of the American reform. They got their way over one of these measures, the 20% tax that would have been levied on payments to foreign companies, unless these foreign companies agreed to consider that they have a permanent establishment in the United States. This measure did not survive the conciliation process on the reform between the American Chamber and Senate.
The Commission expresses satisfaction at this. However, “as the Commission made clear in its letter to US Treasury Secretary Steven Mnuchin, two measures in particular continue to raise concerns”, the spokesperson said. These are the “Base erosion and anti-abuse tax” (BEAT) and the preferential regime proposed for the sales and licensing of American goods or services outside the US (see EUROPE 11923).
The Commission will examine the final bill in greater detail, including how it will be implemented. However, it is already reflecting on possible measures, which could involve a complaint to the WTO. In particular, the preferential regime on intellectual property could be challenged as an export subsidy.
In an interview with EUROPE, the Mexican minister for the economy, Ildefonso Guajardo, called for caution in terms of political response to the American tax reform. (Original version in French by Élodie Lamer)