France, UK offer digital tax concessions after US tariff threat

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The Treasury is proposing to reduce the scope of its digital services tax if the United States promises to return to the negotiating table on a comprehensive proposal, it emerged.Along with the finance ministers of France, Italy and Spain, the UK said in a letter to US Secretary of the Treasury Steven Mnuchin that “would greatly facilitate the task of reaching a consensual solution and reach a political agreement at hand this year, ”reported Bloomberg. .

Mnuchin sent a letter to ministers last week saying that the United States would withdraw from discussions with the OECD on a global digital tax unless the four countries end their independent levies.

Read more: US renounces hopes for global digital tax deal

US Trade Representative Robert Lighthizer later confirmed that the United States will continue to impose additional tariffs on these countries if the plans come to fruition.

A spokesperson for the Treasury said at the time, “We have always been clear about our preference for a comprehensive solution to the fiscal challenges of digitization, and we will continue to work with our international partners to achieve this goal. ”

The four nations are now proposing to adopt a “phased approach” to tax “automated” technology companies, the letter said.

Washington disagrees with countries like France and Britain over their plans to impose taxes on digital services, arguing that they unfairly target American businesses.

Critics say businesses benefit enormously from local markets while making only a limited contribution to corporate tax by keeping their head office abroad.

Read more: UK says it still wants global digital tax deal after US ends talks

The UK royalty focuses on taking a percentage of sales from companies that operate search engines, social media websites and online markets with revenues over £ 500 million. It will take effect next year.

French Finance Minister Bruno Le Maire said Washington’s response last week: “This letter is a provocation. It is a provocation to all the partners of the OECD when we were a few inches from an agreement on the taxation of digital giants. ”

A spokesperson for the Treasury did not immediately respond to a request for comment.

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