US Treasury Secretary Janet Yellen told her G20 colleagues on Friday that Washington was abandoning pressure on a controversial provision in a global digital tax, opening the door to a likely deal.
The US move – part of a broader repositioning by President Joe Biden of the “America First” agenda of former President Donald Trump – demanded immediate praise from Germany and France, who said an agreement was now “within reach” after following the American pivot.
Yellen announced during the G20 finance ministers’ meeting that US officials would “strongly” participate in the talks and “no longer plead for the implementation of a safe haven” of Pillar 1, “a Treasury official said. told AFP.
The Trump administration has insisted on a so-called safe harbor clause in the OECD tax that would allow large technology companies to comply voluntarily, which would hamper progress with an agreement.
The Organization for Economic Co-operation and Development has been working on a multilateral agreement that will include a global minimum tax rate on technical giants.
The aim is to find a general solution to address the policy dilemma on how to earn profits earned in one country by a company headquartered in another country that offers more favorable tax treatment.
European officials said the U.S. relocation was a major breakthrough.
“This is a huge step forward on our path to an agreement between the participating states by the summer,” German Finance Minister Olaf Scholz said in a statement following virtual talks with his G20 counterparts. .
French Economy Minister Bruno Le Maire said an agreement should be reached by the summer, calling for negotiations to be “concluded without delay”.
France approved a tax in 2019 on technology companies such as Facebook, Amazon, Apple and Google, who are accused of relocating their profits abroad.
Paris has suspended the collection of the tax on digital services until the end of 2020 amid the OECD talks.
But the measure drew sharp criticism from the Trump administration, which planned to set tariffs on French goods but eased the levies in early January before leaving Washington.
Yellen indicated the likely move from the U.S. during her Senate confirmation hearing in January, saying she supports efforts to ensure businesses pay their “fair share” and to remove incentives for companies to engage in foreign activities.
In November, about 75 key technology players, including Google and Facebook, supported a French initiative committing to making a “fair tax contribution” in countries where they work.
Without agreement, companies face the risk of increasing national laws that could lead to double taxation.
hs-jmb / dw