Tax policy: EU is putting digital tax plans on hold for the time being

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Status: 07/12/2021 4:28 p.m.

The EU Commission has postponed its plans to tax large digital companies for the time being. The background to this is the G20 finance ministers’ agreement on a global minimum tax. But the USA had also pushed for a postponement.

The EU Commission has put plans on hold to ask tech giants such as Google, Amazon, Apple and Facebook to pay more. However, the background is not that corporations should be spared. The reason for the temporary stop of an EU digital tax are efforts to introduce a global minimum tax, said a Commission spokesman.

After the “extraordinary” breakthrough in the talks of the G20 finance ministers, it was decided to suspend work on a proposal for a digital levy, it said. Most recently, the USA in particular had pushed for a postponement.

No double burden on tech companies

Among other things, the large digital corporations are affected, which so far often pay little taxes overall. However, if a digital tax were to be levied in addition to the minimum tax, American tech companies in particular could be charged twice. US Treasury Secretary Janet Yellen said she hoped the international agreement on a redistribution of taxation rights would make it possible to get rid of existing digital taxes. Such taxes currently exist in France, Spain and Italy, for example.

The financial policy spokesman for the Greens in the European Parliament, Sven Giegold, emphasized that the transatlantic partnership means foregoing own European digital tax plans if the minimum tax is introduced as planned. The EPP Group’s spokesman for economic policy, Markus Ferber, said: “The biggest tax law problem in the EU is tax deals that individual member states such as Luxembourg and the Netherlands are negotiating with multinational companies.” An additional digital tax should not lead to the minimum tax failing.

G20 finance ministers for global minimum tax

At the meeting of the G20 finance ministers on Saturday, leading industrialized and emerging countries stood behind the plan for a global minimum tax, coordinated by the Organization for Economic Cooperation and Development (OECD) and supported by over 130 countries.

Brussels actually wanted to submit a proposal for the European digital tax in July. Recently, however, Washington repeatedly urged that the plans be dropped. US Treasury Secretary Janet Yellen stressed on Sunday that such a tax would discriminate against US companies and would no longer be necessary after the agreement on the global minimum tax.

US suspicious of EU plans

The US regards the EU’s plans for a digital tax with great suspicion and reacted to a national digital tax in France with punitive tariffs. Because practically all large companies in this area come from the United States.

However, a postponement is also having an impact on the Commission’s plans to develop a new source of income with the digital tax, with which the joint European debts for the € 750 billion Corona aid fund are to be repaid.

Eurogroup: waiver of digital tax in order to receive minimum tax

Jakob Mayr, BR Brussels, July 12, 2021 4:04 p.m.

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