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

January 23, 2020 by Dan McCue
Davos Breakthrough: France, US Agree to Press Ahead With Global ‘Digital Tax’ Talks
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.”

A+
a-
  • digital tax
  • France
  • Organization for Economic Cooperation and Development
  • United States
  • In The News

    Health

    Voting

    Geopolitics

    Poland's President Calls on NATO Allies to Raise Spending on Defense to 3% of GDP

    WARSAW, Poland (AP) — Poland's president on Monday called on other members of the NATO alliance to raise their spending... Read More

    WARSAW, Poland (AP) — Poland's president on Monday called on other members of the NATO alliance to raise their spending on defense to 3% of their gross domestic product as Russia puts its economy on a war footing and pushes forward with its invasion of Ukraine.... Read More

    US Adults Fracture Along Party Lines in Support for Ukraine Military Funding, AP-NORC Poll Finds

    WASHINGTON (AP) — As Russia makes battlefield advances and Ukrainian soldiers run short on ammunition, U.S. adults have become fractured along party... Read More

    WASHINGTON (AP) — As Russia makes battlefield advances and Ukrainian soldiers run short on ammunition, U.S. adults have become fractured along party lines in their support for sending military aid to Kyiv, according to a poll from The Associated Press-NORC Center for Public Affairs Research. Democrats are more likely... Read More

    At Paris Gathering, Western Leaders to Show Unity for Ukraine and Signal 'Russia Cannot Win'

    PARIS (AP) — More than 20 European heads of state and government and other Western officials are gathering in a... Read More

    PARIS (AP) — More than 20 European heads of state and government and other Western officials are gathering in a show of unity for Ukraine, signaling to Russia that their support for Kyiv isn't wavering as the full-scale invasion grinds into a third year. French President Emmanuel Macron,... Read More

    Harris Repudiates Trump Worldview and Says the US Won't Back Down on Ukraine's Defense

    MUNICH (AP) — Vice President Kamala Harris on Friday warned of the dangers of growing authoritarianism and isolationism in a... Read More

    MUNICH (AP) — Vice President Kamala Harris on Friday warned of the dangers of growing authoritarianism and isolationism in a not-so-veiled repudiation of Donald Trump’s worldview and threats to renege on security guarantees for NATO allies should he return to the White House. Speaking at the Munich Security Conference, Harris offered... Read More

    Biden Warns Opposing Ukraine Funding Plays 'Into Putin's Hands,' but Faces Resistance in House

    WASHINGTON (AP) — President Joe Biden on Tuesday called for House Republicans to urgently bring a $95.3 billion aid package... Read More

    WASHINGTON (AP) — President Joe Biden on Tuesday called for House Republicans to urgently bring a $95.3 billion aid package for Ukraine, Israel and Taiwan to a vote, warning that refusal to take up the bill, passed by the Senate in the morning, would be "playing... Read More

    Biden Tells Congress to 'Show Some Spine' Against Trump as Border Security and Ukraine Aid Collapse

    WASHINGTON (AP) — President Joe Biden on Tuesday urged Congress to “show some spine” and stand up to Donald Trump... Read More

    WASHINGTON (AP) — President Joe Biden on Tuesday urged Congress to “show some spine” and stand up to Donald Trump even as a Senate deal on border enforcement measures and Ukraine aid was rapidly collapsing. The Democratic president has engaged for months with Senate leaders to... Read More

    News From The Well
    scroll top