France Wants EU to Push Ahead With Digital Tax if Global Efforts Fail

Nearly 140 countries are currently negotiating a major rewrite of international tax rules to account for the rise of big tech.

By Reuters | Updated: 11 September 2020 16:12 IST

France Wants EU to Push Ahead With Digital Tax if Global Efforts Fail

Le Maire has accused the US of seeking to undermine international talks to update cross-border taxation

Highlights

A blueprint for a deal is due from the OECD next month
The aim of reaching an agreement by a year-end deadline looks challenging
A digital tax is among the proposals to give the EU its own revenues

The European Union should push ahead with its own digital tax in the first quarter of 2021 if broader efforts to find an international solution do not bring a breakthrough this year, the French finance minister said on Friday.

Nearly 140 countries are currently negotiating the first major rewrite of international tax rules in a generation to account for the rise of big digital companies.

With a blueprint for a deal due from the Organisation for Economic Cooperation and Development (OECD) next month, the aim of reaching an agreement by a year-end deadline is looking increasingly challenging.

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Speaking to reporters ahead of a meeting of European finance ministers in Berlin, France's Bruno Le Maire said that he wanted to have a fair and efficient international taxation system as soon as possible and ideally within the OECD framework.

"If you look at the consequences of the economic crisis, the only winners are the digital giants," Le Maire said.

"I want to make the things very clear: if it proves to be impossible to get a consensus by the end if this year at the OECD level...we should have, by the beginning of next year, 2021, a European solution for digital taxation."

Britain, France Suggest Phased Approach to Global Digital Tax Talks

Le Maire has accused the United States of seeking to undermine international talks to update cross-border taxation for the digital age.

German Finance Minister Olaf Scholz, who is hosting the Berlin meeting as his country currently holds the presidency of the 27-member bloc, said EU finance ministers would discuss the state of play and how to proceed on the matter.

"We're working very hard to get a blueprint on the question of digital taxation in the OECD," Scholz said.

"And we will work to make it feasible that a global consensus of this question can be reached," Scholz said, adding that such a deal would be a big success not only for Germany's EU presidency, but also for the work at the OECD level.

A digital tax is among the proposals to give the EU its own revenues as a way to pay back jointly issued debt during the COVID-19 pandemic.

The bloc decided in July to jointly borrow EUR 750 billion (roughly Rs. 65,45,325 crores) on the market and spend it to kick start the economy, plunged into a deep recession by the COVID-19 pandemic.

"The Ecofin will have to solve a lot of problems that we are facing due to the COVID-19 crisis and so it's a very good thing that after months, when we met in video conferences and other ways of communication, we are present here and able to speak together," Scholz said.

"After we decided to take very big debt as European Union to tackle this crisis together, to work against the crisis and to work on the recovery in Europe, it is necessary that we are also deciding the question how to pay this debt back," Scholz said.

"And this means that we need to have a decision on European own resources.

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