December 7, 2022

EUNews24

Latest Breaking News, European Affairs

EU Holds US Digital Levy Plans To Focus On Global Tax Deal

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The European Union has agreed to delay a company tax arrangement for the bloc following pressure from the U.S. administration and during a bid to facilitate a broader international tax deal, however, EU member Ireland reiterated its criticisms of the wider reform.

The world’s 20 largest economies endorsed on Saturday a set up for a world overhaul of company tax that may introduce a minimum tax rate and amendment the means massive corporations like Amazon and Google are taxed, based mostly partly on where they sell their merchandise and services rather than on the location of their headquarters.

The U.S. has lobbied against the levy on digital sales that was doubtless to hit Silicon Valley giants’ business in Europe. The EU had pledged to introduce a levy if there was no progress on a sweeping effort to tax firms more uniformly. Such a pact now appears a lot of likely after the Group of 20 endorsed the principles of a global-tax agreement.

Taxation is a hot topic in Europe with officials in Berlin and Paris taking aim at complicated structures used by multinationals, many of them American, that allow them to reduce their effective tax rates. A global deal might help governments capture additional tax from sales in their countries.

EU Economy Commissioner Paolo Gentiloni said he’d already told U.S. Treasury Secretary Janet Yellen “of our decision to put on hold the proposal of the commission of a digital levy.” Delaying the EU arrangement can “permit us to be targeted operating hand in hand to attain the last mile of this historical agreement”

Outside that context, The EU has also tried to focus on companies that build profits in countries where they need no physical presence. That might be through digital advertising or online retail. Countries led by France have started imposing unilateral “digital” taxes that hit the largest U.S. tech companies such as Google, Amazon, and Facebook.

The U.S. calls those unfair trade practices and has threatened retaliation through import taxes.

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