E.U. Delays Digital Levy as Tax Talks Proceed

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Other finance ministers said the delay was another sign of progress.

“It is very, very good that we are now going to the next step and discussing how we are going to do this in the European Union and that the European Union is deciding today not to go public with its own proposal,” said Olaf Scholz, Germany Finance Minister, said when he entered the meeting.

The EU digital levy proposal faced a difficult road to becoming law in Europe, but the prospect of a new proposal that could be construed as a tax targeting American companies would have been another distraction to the fragile negotiations.

The United States has already been upset about other digital taxes that countries like France, Italy and the UK have enacted that are separate from the new proposal. More than a dozen countries have enacted or announced plans in recent years to advance their own digital taxes.

The Biden government has urged countries to cut their digital taxes immediately and has prepared retaliatory tariffs on a wide range of European goods, including cheese, wine and clothing. As part of the global tax negotiations, countries have agreed to pay in exchange for additional taxes on the largest and most profitable multinationals that have a profit margin of at least 10 percent, depending on where their goods or services are sold, even if they are there had no physical presence.

France, Europe’s biggest supporter of a digital tax, did not comment on Monday. His finance minister, Bruno Le Maire, announced at the weekend that France would not legally commit to deducting its tax on digital services until an agreement came into force, which is unlikely before 2023.

In her remarks at the meeting on Monday, Ms. Yellen stressed the importance of a close relationship between the United States and the European Union and the importance of the global tax treaty that she helped broker. She argued that a global minimum tax agreement would help European nations make vital investments in their economies and reduce inequality.

“The long-term sustainability of public finances is critical, and that’s one of the reasons we must continue to work together to introduce a minimum global tax of at least 15 percent, in line with the commitment made by the G20 a few days ago “, she said. said Yellen. “We hope that all EU member states will join the consensus and that the European Union will move forward on this issue at EU level.”