France says US blocking talks on global digital tax; plans EU-wide tax if discussions fail

France accused the United States on Wednesday of attempting to block international talks on the renewal of cross-border taxation for the digital age and urged Europe to prepare an EU tax if the discussions fail.

For the first time, nearly 140 countries are negotiating to rewrite the international tax rules in the present generation to account for the rise of digital giants such as Google and Amazon.

A blueprint from the Organisation for Economic Cooperation and Development (OECD) is due next month, however, the aim of reaching an agreement by December 2020 seems increasingly challenging.

Earlier this year, America had sought to pause the negotiations after suggesting that any such deal should include a voluntary opt-in mechanism for US companies and raised uncertainties about the scope of the global digital tax.

French Finance Minister Bruno Le Maire said that Washington clearly does not want a digital tax deal at the OECD, hence it is creating obstacles that prevent other nations from reaching an agreement even though the technical work is complete.

READ | Macron: EU Ties Needed To Resolve Turkey Crisis

READ | UK, EU At Brexit Loggerheads Again; Legal Action Warned Against Johnson Govt's New Bill

Why is the global digital tax necessary?

The rise of big digital service corporations has irked finance ministers around the globe because such companies often earn big revenues in their countries while making profits in lower-tax countries like Ireland.

In the absence of a global deal, France has created its own national digital services tax, making it the target of US threats of retaliatory tariffs. Some European countries have followed France in creating nationwide digital service taxes. Undaunted by US actions, Le Maire has called for EU countries to go ahead with a union-wide tax if there’s no international agreement.

By year-end, if it is confirmed that Washington has been blocking the discussions, France is planning to make a formal proposal to the European Union for tax digital activities in the first quarter of 2021, he said.

Le Maria expressed full confidence that Irish Finance Minister Paschal Donohue would live up to the promise to support such a tax, despite undermining previous attempts at the EU level.

READ | India, France, Australia Hold 1st Trilateral Dialogue With Focus On Indo-Pacific

READ | Trump's 'precious, Historical Figures' Brought From France In 2018 Were 'fake': Report