Pages

30 January 2020

France poised to drop plan to tax tech giants amid signs of US deal

Larry Elliott

France is poised to announce on Wednesday that it is dropping its go-it-alone plan to tax big US tech companies in exchange for Washington’s agreement to press ahead with attempts to find a multilateral solution.

Hopes of an agreement were rising in Davos after several days of intense talks involving the French finance minister, Bruno Le Maire, the US treasury secretary, Steve Mnuchin, and Ángel Gurria, the head of the Organisation for Economic Cooperation and Development.

The deal is likely to leave Britain – which will introduce a digital services tax in the spring – more exposed to Washington’s anger over what it sees as attacks on its companies.

Gurria, speaking to the Guardian, said: “There have been a lot of conversations. The exchanges have involved the French showing a willingness to make a move if the Americans do the same.”

The OECD has been working on plans to find an internationally agreed ways of taxing digital commerce and is planning an announcement in the summer.


But some countries have grown impatient with the lack of progress and have decided on unilateral measures. France’s plan – called the GAFA tax because it was seen to target the US companies Google, Apple, Facebook and Amazon – prompted the threat of retaliation from Washington, which vowed to put taxes on French imports, including wine and champagne.

“When you talk about taxing trade it ceases to be a matter for individual countries and becomes an EU question,” Gurria said, warning of an escalation in trade tensions. “Everybody wants to avoid that.”

He added: “If we have an international solution then everybody will adopt it. If we don’t there will be a veritable cacophony of individual national initiatives. Each country will be thinking of a different approach and a different number to apply. We will be back to square one where a number of countries wanted to go their own way.”

Britain is one of the country’s pursuing a go-it-alone approach and will introduce a 2% digital services tax in April.

A Treasury spokesman said: “We are fully engaged in international discussions to address the challenges digitalisation poses for tax. Our strong preference is for an appropriate global solution.

“We’ve committed to introduce our digital services tax from April 2020. It will be repealed once a global solution is in place.”

Mnuchin also made it clear in Davos that Britain, which is seeking to secure a post-Brexit trade agreement with the US, would face tariffs if the chancellor, Sajid Javid, went ahead with the plan.

Gurria said the OECD was still several months away from a multilateral solution to a problem that has vexed policymakers since the rapid growth of digital commerce made it possible for companies to make huge profits while paying little tax.

He said it was important to come up with something more than a lowest common denominator solution. The US is pushing for any OECD-brokered deal to involve only small levies on the Silicon Valley giants, but Gurria said: “If we don’t have something of good quality then that satisfies nobody.”

The French president, Emmanuel Macron, raised hopes of a deal on Monday, when he tweeted he had conducted a “great discussion with Donald Trump on digital tax”.

Macron added: “We will work together on a good agreement to avoid tariff escalation.” Trump replied back with “excellent”.

Gurria said it was encouraging that China and the US had agreed phase one of a trade deal and said a France-US agreement on tax would further improve the mood. He said he had been urging Le Maire and Mnuchin to de-escalate and give the multilateral solution a chance. “I hope that can be confirmed tomorrow”.

The head of the Paris-based OECD – which has 36 developed country members – said he expected Britain and the EU to eventually come up with a trade deal as efficient and least costly as possible.

As 2020 begins…

… we’re asking readers, like you, to make a new year contribution in support of the Guardian’s open, independent journalism. This has been a turbulent decade across the world – protest, populism, mass migration and the escalating climate crisis. The Guardian has been in every corner of the globe, reporting with tenacity, rigour and authority on the most critical events of our lifetimes. At a time when factual information is both scarcer and more essential than ever, we believe that each of us deserves access to accurate reporting with integrity at its heart.

More people than ever before are reading and supporting our journalism, in more than 180 countries around the world. And this is only possible because we made a different choice: to keep our reporting open for all, regardless of where they live or what they can afford to pay.

We have upheld our editorial independence in the face of the disintegration of traditional media – with social platforms giving rise to misinformation, the seemingly unstoppable rise of big tech and independent voices being squashed by commercial ownership. The Guardian’s independence means we can set our own agenda and voice our own opinions. Our journalism is free from commercial and political bias – never influenced by billionaire owners or shareholders. This makes us different. It means we can challenge the powerful without fear and give a voice to those less heard.

None of this would have been attainable without our readers’ generosity – your financial support has meant we can keep investigating, disentangling and interrogating. It has protected our independence, which has never been so critical. We are so grateful.

As we enter a new decade, we need your support so we can keep delivering quality journalism that’s open and independent. And that is here for the long term. Every reader contribution, however big or small, is so valuable.

No comments:

Post a Comment