France says US blocks global digital tax negotiations

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PARIS (Reuters) – France on Wednesday accused the United States of seeking to undermine international negotiations to update cross-border taxation in the digital age and urged Europe to prepare a European tax if negotiations fail.

FILE PHOTO: Bruno Le Maire, French Minister of Economy, Finance and Recovery speaks at a press conference in Paris, France on September 3, 2020. Ludovic Marin / Pool via REUTERS

Nearly 140 countries are negotiating the first major rewrite of international tax rules in a generation to accommodate the rise of large digital companies like Google and Amazon.

With a draft agreement expected by the Organization for Economic Co-operation and Development (OECD) next month, the goal of reaching a deal before the year-end deadline looks increasingly difficult.

Washington called for a pause in discussions earlier this year after suggesting any deal should include a voluntary opt-in mechanism for U.S. companies and raising concerns about the scope of the tax.

“It’s very clear, the United States does not want a digital tax (agreement) at the OECD. They therefore create obstacles that prevent us from reaching an agreement even if the technical work is done, ”French Finance Minister Bruno Le Maire told reporters.

The rise of large digital service companies has annoyed finance ministers around the world as these companies are often able to generate significant income in their country while recording profits in low-tax countries like Ireland. .

In the absence of a comprehensive deal, some European countries have followed France by creating their own national tax on digital services, which, in France’s case, has made it the target of US threats of retaliatory tariffs.

Unwavering, Le Maire renewed a call to EU countries to move forward with a bloc-wide tax if there is no international agreement.

“If the US blockade is confirmed by the end of the year, we are counting on the European Union to make a formal proposal to tax digital activities in the first quarter of 2021,” he said.

He added that he was fully convinced Irish Finance Minister Paschal Donohue would keep his promise to support such a tax, even if Dublin rolled back previous attempts at EU level.

Reporting by Leigh Thomas; Editing by Chris Reese and Mark Potter

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