Washington: Delay the EU digital levy

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The planned EU digital levy threatens to derail international talks to overhaul global corporate tax rules and should be delayed, the U.S. Joe Biden administration said in a position paper obtained by POLITICO.

Washington sent the “nonpaper” to EU diplomats a few days ago ahead of global tax negotiations this week at the Organization for Economic Cooperation and Development, two officials said. The U.S. paper was first reported on Wednesday by AFP.

OECD talks aim to reach a political deal on taxing the world’s 100 biggest companies and set a global minimum corporate tax rate of 15 percent. G20 countries are set to rubber stamp the deal in a few weeks. But Washington will sign up to the deal only if other countries withdraw their national tech taxes — that includes EU initiatives.

“The EU Digital Levy, even if different from previous digital services taxes, threatens the work undertaken via the OECD/G20 process,” the U.S. document said. “We urge you to work with the European Council and the European Commission to delay the release of the EU Digital Levy proposal.”

The Commission intends to propose the initiative in mid-July, as a means to help repay the money it’ll raise to fund the EU’s €750 billion recovery fund. Commission officials have tried to reassure Washington that the “soft” levy won’t lead to double taxation or discriminate against U.S. tech firms.

“We appreciate the repeated public statements indicating the EU intends to ensure its digital levy complements a multilateral consensus solution,” the U.S. paper continued. “Such complementarity is only possible if the OECD/G20 Inclusive Framework consensus is reached before the EU proposes its levy.”

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