European countries slam US withdrawal from tech tax talks
PARIS (AP) - European countries are pushing the Trump administration to withdraw from negotiations on a large tax on large technology companies.
French Finance Minister Bruno Le Maire spoke about France Inter and called it a "provocation". France will continue to introduce the tax regardless of the U.S. change of heart.
Le Maire referred to a letter in which US Treasury Secretary Steven Mnuchin told finance ministers of France, Spain, Italy and the United Kingdom that he would suspend the tax talks.
"This letter is a provocation. It was a provocation against all partners of the OECD (Organization for Economic Cooperation and Development) when we were inches from an agreement on the taxation of digital giants, ”said Le Maire.
In a statement, Treasury spokeswoman Monica Crowley said the US "suggested a break" as countries focus on fighting COVID-19 and reopening their economies.
The countries discussed an international agreement on how global taxes work. The technology tax is intended to prevent measures to avoid taxation by multinational companies. However, the United States has stated that it is wrongly picking out companies like Amazon and Google.
US trade representative Robert Lighthizer has rejected OECD efforts to date. He said the countries concerned were trying to harm American companies and said on Wednesday to a congressional committee, "This is not something we will ever participate in."
Some countries like Spain and the UK have been working on their own digital taxes while waiting for a global one. The head of the OECD, a group of wealthy nations, urged countries to continue working on the global levy and warned of the risks if more countries choose to introduce their own digital taxes.
"This in turn would trigger tax disputes and inevitably worsen trade tensions," said Secretary General Angel Gurria. "A trade war, especially at a time when the global economy is going through a historic downturn, would do so." has further harmed the economy, jobs and confidence. "
In Europe, large technology companies like Google and Facebook often pay very little of their taxes in the countries of the European Union where they are headquartered and in countries where they do large and profitable business.
“The digital tax is a necessity of the 21st century. It's not a mood or an eccentricity, ”said Spanish Finance Minister María Jesús Montero to Spanish radio Cadena SER. "This is because we have an analog tax system while we have a digital society and digital economy."
Le Maire said there was a joint response to the letter from the four countries on Thursday.
The French parliament approved the first steps of a digital tax law last year, but agreed to postpone implementation until December this year in return for the United States holding back retaliation.
The United States has launched an investigation into the French digital tax, which may result in tariffs on French products.
Joe Kennedy, a senior fellow at the Information Technology and Innovation Foundation, a bipartisan think tank, said the U.S. has a legitimate complaint about the French tax on digital services that violates international trade rules. However, Kennedy is concerned about the decision to suspend the talks as the global economy faces the aftermath of the coronavirus pandemic.
"I think the administration should stay there," he said. "It is best to negotiate ... this is the worst time to worsen trade disputes."
A so-called "Google tax" is also passing through the Spanish parliament in order to levy it later this year. The Spanish cabinet agreed in February to proceed with its adoption despite the Trump administration's threat of retaliation.
Spain wants to levy a 3% tax on online ads, on businesses brokered on digital platforms, and on the sale of user data by technology companies with international sales of more than 750 million euros a year and internationally more than 3 million euros in Spain . It hopes to generate additional tax revenue of almost 1 billion euros annually.
The UK, which recently introduced its own digital services tax, said it will continue to push for a global levy.
"We have always been clear that we prefer a global solution to the tax challenges of digitization, and we will continue to work with our international partners to achieve this," said the finance department in a statement.
The UK's 2% digital tax came into effect in April and applies to search engines, social media services and online marketplaces that generate annual sales of more than £ 500 million ($ 624 million), including $ 25 million Pounds from British users. The Treasury estimates that it will eventually raise an additional £ 515 million a year.
Associated press writers Aritz Parra in Madrid, Kelvin Chan in London, and Paul Wiseman and Martin Crutsinger in Washington contributed to this report.
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