EU should move forward with digital tax plans, France says

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Bruno Le Maire, French Minister of Economy, Finance and Recovery, wearing a protective mask, leaves following the weekly cabinet meeting at the Elysee Palace in Paris, France, October 14, 2020. REUTERS / Charles Platiau

PARIS (Reuters) – The European Union should move forward with plans for a bloc-wide digital tax in case global negotiations at the OECD to rewrite international tax rules fail, said on Wednesday the French Minister of Finance, Bruno Le Maire.

G20 finance ministers on Wednesday supported the extension until mid-2021 of negotiations to update cross-border tax rules in the digital age after negotiations halt after the COVID pandemic outbreak -19, and in the face of Washington’s reluctance as the US presidential election was approaching.

The Mayor said his US counterpart Steven Mnuchin was opposed to the OECD’s digital tax proposals, which aim to discourage US-based tech giants like Google. GOOGL.O, Facebook FB.O and Amazon AMZN.O profits legally transferred to low-tax countries like Ireland.

He added that a change of administration in Washington after the November 3 US election would not necessarily result in a change in the US position, although the new government might be less aggressive with trade retaliation.

“Either we accept again an extension for months, even years, or we consider that fair taxes on digital activities are urgent and in this case, Europe is leading by example,” said Le Maire.

“We consider it essential that Europe leads by example and adopts digital taxation as soon as possible.”

In the absence of a comprehensive reform of decades-old cross-border tax rules, a growing number of countries have followed France’s example by projecting their own national tax on digital services.

While talks were underway this year, France suspended the collection of its tax until December and Washington suspended trade tariffs in retaliation on French products until January.

Even though negotiations have been postponed until mid-2021, Le Maire said the French tax on digital services would be collected as planned from December.

Reporting by Leigh Thomas; Edited by Gareth Jones

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