Davos Breakthrough: France, US Agree to Press Ahead With Global ‘Digital Tax’ Talks

January 23, 2020 by Dan McCue
French Finance Minister Bruno Le Maire speaks to Reuters at the World Economic Forum in Davos, Switzerland.

The United States and France agreed Thursday to proceed with talks that could result in a global rewrite of cross-border tax rules for the digital era.

The agreement to temporarily set aside a brewing tariff war over France’s digital tax on big tech companies to focus on securing a broader global deal, was announced by French Finance Minister Bruno Le Maire at the World Economic Forum in Davos, Switzerland.

The announcement came after a series of meetings in Davos between Le Maire, U.S. Treasury Secretary Steven Mnuchin, and Angel Gurría, secretary general of the Organization for Economic Cooperation and Development.

“We had long talks this morning with the U.S. Treasury Secretary and the OECD Secretary General, and I am happy to announce to you that we have found an agreement between France and the United States, providing the basis for work on digital taxation at the OECD,” Le Maire said.

“It’s good news, because it reduces the risk of American sanctions and opens up the prospect of an international solution on digital taxation,” he added.

Le Maire and Mnuchin concluded their meetings at the forum by exchanging a series of written proposals for the first redrafting of international tax rules since the 1920s.

The proposals will be considered by the 137 member governments of the OECD when they meet next month in Paris.

Speaking to Reuter’s Axel Threlfall on the “Davos Today” television program Thursday morning, before his final meeting with Mnuchin, Le Maire emphasized just how far the two sides had come during negotiations at the forum.

“We arrived in Davos under threat of U.S. sanctions,” he said. “A few days later, we have the possibility of building together a very strong international solution for digital taxation.”

“Of course, we are all aware that, having a new international taxation system, being able to tax the digital activities, is complicated. It takes time. But we are on the right track,” he added.

Gurria has been working for years to create a level playing field on digital taxation. Now that the U.S. and France have agreed to de-escalate their dispute over a proposed French tax on big tech companies, he said a draft framework for global digital tax could be ready by summer.

“We have no Plan B — we just have to get it done,” he said this week while speaking on a Davos panel.

That’s because other countries, including Britain, Italy and Spain, are currently imposing their own national digital-tax regimes.

Le Maire told Reuters that reality overhangs every discussion of the digital taxation issue.

“The question is, what kind of taxation regime do we want?” he said. “Do we want to have a world in which everybody has their own national taxation on digital activities — a prospect that raises the concern over taxation conflicts among nations — or do we want the same system of international taxation for digital activities apply to everyone?

“I’m deeply convinced that the second option is the best option,” he said.

France has already postponed collection of its digital tax, and has said it will scrap its tax if an international accord can be reached.

One thing France does not want is the so-called optional taxation system that has been discussed in some quarters, Le Maire said..

“That’s a red line for us, because the reality is, no private company wants to be taxed,” he explained. “What we want is a system and a taxation solution that is credible, fair, and solid.”

Geopolitics

Checking China’s Diplomatic Piracy in the South China Sea
Foreign Affairs
Checking China’s Diplomatic Piracy in the South China Sea
September 18, 2020
by Craig Singleton

China appears keen to bring piracy back as an instrument of foreign policy, but the days of eye patches and wooden legs are long gone. Instead, Beijing’s most effective raiding parties prefer business suits and briefcases, thus allowing them to ransack and plunder under the guise... Read More

Trump Vote-Rigging Claims Fit Russia’s Plan, Former Top Spy Says
2020 Elections
Trump Vote-Rigging Claims Fit Russia’s Plan, Former Top Spy Says

President Donald Trump is playing into Russia’s hands by claiming that his political adversaries are trying to rig the U.S. election, a former senior intelligence official said. Sue Gordon, who left the second-highest post in the Office of the Director of National Intelligence a year ago,... Read More

Whistleblower Says Trump Aides Suppressed Russia Evidence
2016 U.S. Election
Whistleblower Says Trump Aides Suppressed Russia Evidence

WASHINGTON — Trump administration appointees suppressed intelligence on Russian election interference and the threat from white supremacists, according to a whistleblower complaint filed by the Department of Homeland Security’s former intelligence chief. The complaint by Brian Murphy alleges interference from officials including Acting DHS Secretary Chad... Read More

Japan PM Shinzo Abe Says He's Resigning for Health Reasons
Foreign Affairs
Japan PM Shinzo Abe Says He's Resigning for Health Reasons

TOKYO (AP) — Japan's longest-serving prime minister, Shinzo Abe, said Friday he is stepping down because a chronic health problem has resurfaced. He told reporters that it was “gut wrenching” to leave many of his goals unfinished. Abe has had ulcerative colitis since he was a... Read More

Russian Navy Conducts Major Maneuvers Near Alaska
Geopolitics
Russian Navy Conducts Major Maneuvers Near Alaska

MOSCOW (AP) — The Russian navy conducted major war games near Alaska involving dozens of ships and aircraft, the military said Friday, the biggest such drills in the area since Soviet times. Russia's navy chief, Adm. Nikolai Yevmenov, said that more than 50 warships and about... Read More

US Demands Restoration of UN Sanctions Against Iran
Geopolitics
US Demands Restoration of UN Sanctions Against Iran

WASHINGTON (AP) — The Trump administration is set to demand the restoration of all international sanctions on Iran in a move that will further isolate the U.S. at the United Nations, test the credibility of the U.N. Security Council and possibly deal a fatal blow to... Read More

News From The Well
scroll top