Tug of war with the US – EU countries extend digital tax suspension

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Austria and four other European countries have reached an agreement with the US on an extended suspension of taxation on digital services. A joint statement from the office of U.S. Trade Representative Katherine Tai, along with Austria, Britain, France, Italy and Spain, said an October 2021 agreement to suspend threatened U.S. retaliatory tariffs on digital taxes will be extended until June 30th.

The agreement was previously limited to the end of 2023. The extension is intended to give large, highly profitable companies more time to negotiate international tax rights.

The US trade representative had previously threatened 25 percent tariffs on imports from the five European countries and Turkey because these countries had introduced a digital tax. According to Tai, the taxes on digital services are discriminatory because they are mainly aimed at American tech giants such as Facebook owner Meta, Google parent Alphabet, Amazon.com and Apple. The US has already imposed retaliatory measures against France over the national digital tax, but initially suspended them.

Status quo extended
The original agreement represented a compromise. Under this agreement, the five countries were allowed to keep their digital taxes, but would at least have to suspend them until a global tax treaty is implemented. Thursday’s joint statement extends the status quo, so to speak, and is in line with a statement from G20 and OECD countries in December that called for an agreement to be finalized by the end of March and signed by June 30.

In October 2021, almost 140 countries under the umbrella of the Organization of Industrialized Countries (OECD) agreed on the details of a global tax reform. This includes a minimum tax of 15 percent for internationally operating companies. Moreover, emerging countries should receive more revenue from the world’s largest companies. Tax havens must be dried up and large digital companies in particular must be made more responsible.

Source: Krone

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