EU should press ahead with digital tax plans, France says

PARIS (Reuters) – The European Union should press ahead with plans for a bloc-wide digital tax in case global talks at the OECD to rewrite international tax rules fail, French Finance Minister Bruno Le Maire said on Wednesday.

G20 finance ministers gave their support on Wednesday to extending until mid-2021 negotiations to update cross-border tax rules for the digital age after talks ground to a halt following the COVID-19 pandemic outbreak, and in the face of reticence from Washington as the U.S. presidential election neared.

Le Maire said his U.S. counterpart Steven Mnuchin was opposed to OECD proposals on digital taxation, which aim to discourage U.S.-based tech giants like Google GOOGL.O, Facebook FB.O and Amazon AMZN.O from legally shifting profits to low-tax countries like Ireland.

He added that a change of administration in Washington after the Nov. 3 U.S. election would not necessarily lead to a change in the U.S. position, although the new government might be less aggressive with trade retaliation.

“Either one accepts an extension again for months, maybe years, or one considers that fair taxes on digital activities are urgent and in this case Europe sets the example,” Le Maire said.

“We consider it indispensable that Europe sets an example and adopts digital taxation as soon as possible.”

In the absence of a global reform of decades-old rules on cross-border tax, a growing number of countries have followed France’s lead with plans for their own national digital services tax.

While talks were underway this year, France suspended collection of its tax until December and Washington suspended until January retaliatory trade tariffs on French goods.

Even though the talks have been pushed back until mid-2021, Le Maire said that the French digital services tax would be collected as planned from December.