PARIS (Reuters) – The United States thinks a French plan for a tax specifically targeting digital companies would be discriminatory against its businesses, a senior U.S. Treasury official said on Tuesday.
FILE PHOTO: Apple company logos are reflected on the glass window outside an Apple store in Shanghai, China January 3, 2019. REUTERS/Aly Song/File Photo
France and Britain as well as Italy and Spain are pushing ahead with plans for such taxes at the national level after EU countries failed to reach an agreement for the bloc as a whole.
Countries outside the EU such as Australia are planning similar taxes in the absence of a broader reform of international tax rules to account for the rise of companies such as Apple, Google and Facebook.
Chip Harter, the U.S. Treasury’s top international tax official, said such taxes were “ill conceived” and it was better to pursue broader international tax reform at the Organisation for Economic Co-operation & Development (OECD).
“The challenges facing the international tax system are just far broader than how to tax social media and search engines,” Harter told journalists in Paris before talks at the OECD this week.
Digital giants can book profits in countries with the lowest taxes, no matter where the customer is, which some countries say is unfair.
“The United States opposes any digital services tax proposals whether they be French or UK,” Harter said.
“What we have seen of the most recent French proposals, we view them as highly discriminatory against U.S. businesses … Various parts of our government are studying whether that discriminatory impact would give us rights under trade agreements, WTO, treaties,” he added.
French Finance Minister Bruno Le Maire said France would bring out a bill next month, although a broader international deal was preferable.
“The best is to reach a consensus at the OECD because once there is an international tax, France will withdraw its tax at the national level,” Le Maire told journalists after a meeting his EU counterparts in Brussels.
Global reform of international tax rules has been debated for years but progress has been slow.
A new push is under way at the OECD after nearly 127 countries and territories agreed in January that any revision of global tax rules should tackle how to divide up the right to tax digital firms’ cross-border income.
Speaking at a meeting of EU finance ministers, Romania’s Eugen Teodorovici said EU governments would seek to reach a common position over the OECD-led overhaul. If that reform were delayed beyond 2020, the EU could restart talks for its own tax.
Reporting by Leigh Thomas; Additional reporting by Francesco Guarascio; Editing by Alison Williams and Robin Pomeroy