The European Union and its Member States are irritated by the insolence of United States, which is now refusing to continue negotiations on digital taxation at the OECD. The American announcement gave rise to a cascade of reactions on Thursday 18 June condemning the American attitude and reaffirming the determination of Europeans to make progress on digital taxation, with or without the Americans.
On Wednesday, the US Treasury had suggested “taking a break from OECD talks on international taxation as governments around the world focus on responding to the Covid-19 pandemic and safely reopening their economies”.
According to the Financial Times, a letter, sent a few days ago to the French, Spanish, Italian and British Finance Ministers, indicates instead that the United States believes that the negotiations have reached an impasse and prefers to withdraw from the negotiations.
A new “provocation”
On Thursday, on radio France Inter, French Finance Minister Bruno Le Maire described the letter as “a provocation to all OECD partners”. The four countries receiving the letter have already replied, confirming their desire to have an agreement at the OECD as soon as possible, he said.
The announcement is all the more ill-received, as it comes a few weeks after the opening of new US investigations into the taxes on digital services in some ten countries and the EU (see EUROPE 12497/28). “What is this way of treating the allies of the United States, including the British, the Spanish, the Italians, us French, by systematically threatening us with sanctions?”, the Minister asked indignantly.
In January, to avoid American sanctions in retaliation for the French ‘GAFA’ tax, Paris agreed to take an important step towards Washington by finally proposing to postpone until December 2020 advance payments due in April on the digital tax in France (see EUROPE 12410/3), until an international agreement is reached at the OECD.
On Thursday, Bruno Le Maire confirmed that there will be a taxation of digital giants in France in 2020, which will either be the result of an agreement at the OECD or the application of the national tax, in case of failure.
OECD calls for further negotiations
“All members of the Inclusive Framework should remain engaged in the negotiation towards the goal of reaching a global solution by year end, drawing on all the technical work that has been done during the last three years, including throughout the Covid-19 crisis”, OECD Secretary-General Angel Gurría said in a statement.
The absence of a multilateral solution will only increase the number of unilateral measures, he said. And a “trade war, especially at this time, where the world economy is going through a historical downturn, would hurt the economy, jobs and confidence even further”, he warned.
Commission ready to relaunch its European solution
The European Commission also regretted the US position and reiterated its support for an ambitious international agreement at the OECD. But if the US blockade were to paralyse the talks, the EU would not hesitate to table a European proposal, Taxation Commissioner Paolo Gentiloni reiterated once again on Twitter.
According to a European source, the subject could be raised on Friday 19 June during the videoconference of EU heads of state or government. However, this source considered that it was too early to say whether the US withdrawal from the negotiations will give new impetus to a European solution. (Original version in French by Marion Fontana and Mathieu Bion)