Bruno Le Maire, the French Minister of Finance announced last week that France will start collecting digital services tax on tech giants irrespective of whether the United States participates in the talks on finding a global solution.
Last week US trade representative Robert Lighthizer announced that the US is withdrawing from the negotiation on digital services tax, citing the lack of progress as the reason for the withdrawal.
In their joint response to the American withdrawal, France, Italy, Spain and the United Kingdom emphasized that they want to see results as soon as possible. According to European countries, big tech companies don’t pay enough tax where they conduct their business and earn their profits: due to the lack of physical infrastructure necessary for their operations, they can easily shift their profits to just about anywhere in the world.
Some European countries have already adopted a digital tax but did not levy it for the duration of the OECD-led talks in the hopes of finding international agreement on a global levy.
The United States is opposed to the one-sided taxation of American tech giants while there is no agreement on the subject within the OECD. The Trump administration floated the idea of introducing tariffs on car/automobile imports as retaliation for unilateral taxation. France suspended collection of the DST until December 2020 to prevent the United States from applying retaliatory tariffs on a range of French goods.
Author: MTI/Index