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USA wants to drop EU digital tax plans

USA wants to drop EU digital tax plans

The US government has urged the European Union to delay a proposed mid-July plan for a European tax on digital businesses. Washington indicated in a document presented to Agence France-Presse on Wednesday that such plans could “jeopardize” ongoing international talks on global minimum corporate taxes. According to diplomats, the message was only sent to a few EU capitals.

These governments are supposed to prevent the EU Commission from submitting a proposal for a European digital tax on July 14, as planned. The German federal government and other capitals are urged to act accordingly with other EU member states and the Commission. Because the timing of the commission’s proposal carries with it the risks of allowing international negotiations to be “completely derailed at a sensitive point,” they said.

Diplomats told AFP that the target of US pressure to delay the commission’s proposal is Germany, the Netherlands and other northern European countries. The target was countries that had already blocked a previous plan for a European digital tax.

Talks about global minimum taxes are currently underway within the framework of the Organization for Economic Co-operation and Development (OECD) and the G20. Difficult negotiations began to move in May after the United States proposed a tax rate of at least 15 percent. German Finance Minister Olaf Schulz (Social Democratic Party) has expressed confidence that a breakthrough can be made at the international level.

The US views EU plans for a digital tax with great suspicion, and has responded to France’s national digital tax with punitive tariffs. Because almost all the big companies in this field come from the United States.

The EU Commission stresses its plans that these will affect thousands of companies, not just US companies. However, it was noted in the US letter that “important interest groups” will interpret the move as a “unilateral measure” before a final agreement is reached at the OECD and G20 level. The goal is to achieve this by October.