Finance Minister Janet Yellen said Friday that regulators have agreed to eliminate a controversial part of the U.S. government’s plan to reform global digital tax rules, paving the way for a faster deal.
What is happening: Yellen told G20 finance ministers that the US would abandon a safe haven provision that the Trump administration fought for, which would essentially allow tech companies to abandon a new tax regime, the FT reported .
Why it matters: This indicates that Washington is ready to make progress with an international digital tax treaty, something the Trump administration has not achieved.
Context: Countries around the world, including France, have tried to establish digital taxes, which are usually aimed at US technology giants that make money from international users.
- The effort has also taken off in the US – Maryland has just become the first state to introduce a tax on digital advertising.
- The business and technology communities were watching to see how the Biden administration would handle this issue. The process was slow and European countries were eager to move forward with their tariffs.
What they say: Technology companies want one global digital tax treaty, arguing that they should pay their tariff share, but that it should be uniform.
- “As the global economy seeks to recover from the global pandemic and governments face new fiscal pressures, an agreed solution is now needed more than ever to ensure a sustainable framework for cross-border trade and investment,” Google said. Vice President of Government Affairs and Public Policy Karan Bhatia wrote in a blog post on Thursday.
What’s next: Countries will continue to work out an agreement with the Organization for Economic Co-operation and Development, where negotiations have taken place.