European Leaders See Promise on Digital Tax

2021-01-26

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PARIS - The U.S. Senate's confirmation of U.S. Treasury Secretary Janet Yellen has raised hope on the other side of the Atlantic. Yellen said the U.S. administration remains committed to working to resolve digital taxation disputes, a remark that Europeans are reading optimistically.

Overall, Yellen explained that the new administration supports the call for tech companies to pay more taxes, a statement that won praise from French Finance Minister Bruno Le Maire, who spoke at the World Economic Forum.

"I think it is very good news that the new Secretary for the Treasury Janet Yellen just explained that she was open about the idea of thinking about a new international taxation with the two pillars: First of all, digital taxation and, of course, also a minimum taxation on corporate tax," Le Maire said. "I think we are on the right track. There is a possibility of finding an agreement on this new international taxation system by the end of this spring 2021."

The comments echoed those by German Finance Minister Olaf Scholz. He told Reuters on Tuesday he hopes an international agreement on digital taxation will happen by summer.

Google, Apple, Facebook, and Amazon are dubbed as GAFA in France by those who criticize what they say are the multinationals' longstanding avoidance of European taxes.

For years, former U.S. president Donald Trump had opposed any proposal to tax the tech giants.

The Organization for Economic Cooperation and Development (OECD) hosted the international talks over digital taxation. Members postponed a deadline for an agreement into 2021 after the U.S. pulled out of talks in June last year due to the coronavirus pandemic.

The French finance minister said it is a matter of fairness.

"The winners of the economic crisis are the digital giants," Le Maire said. "How can you explain to some sectors that have been severely hit by the crisis and that are paying their due level of taxes that the digital giants will not have to pay the same amount of taxes? This is unfair and also inefficient from a financial point of view."

Last October, the OECD warned that tensions over a digital tax could trigger a trade war that could wipe out one percent of global growth every year.