01/12/20

EUROPE: Biden should clarify US position on digital tax within two months, France says.

As published on euractiv.com, Tuesday 1 December, 2020.

The European Union hopes Joseph Biden’s incoming administration will clarify the U.S. position on digital taxation within two months of taking office, a French Finance Ministry source said on Monday (30 November).

The EU is considering going ahead with a bloc-wide tax on digital services offered by companies such as Google and Amazon if a global deal to rewrite rules for cross-border taxation is not reached by mid 2021.

Efforts at the Organisation for Economic Cooperation and Development (OECD) to update the rules for the era of digital commerce stalled this year. Donald Trump’s administration balked at the prospect of signing up to a multilateral deal shortly before the presidential election.

EU heads of state and government are due to take a look at the situation in March and decide what course of action the bloc should take, the French Finance Ministry source said.

“Obviously, March was not chosen by chance. March will be two months after Biden takes office … We hope to have contacts within these two months with the new American administration,” the source said.

“Depending on what the Biden administration says, the European Council – it’s at the level of EU heads of state and government – will give guidelines in March,” the source added.

France is pushing its EU partners to prepare an EU digital tax in early 2021 that could be quickly applied in case the talks at the OECD fail again by mid year.

Paris has its own national digital tax, but has pledged to scrap it as soon as there is an international deal. It suspended the levy this year until December while negotiations at the OECD were under way.

On a related note, U.S. tech giants Amazon and Apple have not signed up to a new French initiative to get global tech companies to publicly commit to principles including paying their fair share of taxes, government officials said on Monday.

Amid a public outcry about technology groups’ good fortunes during the coronavirus pandemic this year, Macron’s advisers said on Monday that the president had asked tech companies to sign up to a new initiative called “Tech for Good Call” underlining principles for the post-COVID world.

The French government released a list of 75 executives of tech companies that had signed up to the initiative so far, including Google CEO Sundar Pichai, Facebook’s Mark Zuckerberg and Microsoft President Brad Smith. Apple and Amazon were notably absent from the list.

Apple declined to comment, but French officials said talks with the group were ongoing and they could still join the initiative, details of which will be published officially by Tuesday. A representative for Amazon, which French officials said had declined to join the initiative, did not return a request for comment.

“The goal is also to… observe objectively those who decide to play ball and align their interest with individuals and societies and those who stay out of this joint movement,” a presidential adviser told a press briefing.

Leading tech executives such as Facebook’s Zuckerberg attended the so-called “Tech for Good” summit hosted by the French president at the Elysee Palace in 2018, which gave birth to working groups on issues that have become sources of tension between governments and “Big Tech”.

The new initiative is not legally binding, but French officials said Macron will use it as a tool to influence upcoming negotiations at global forums on regulating Big Tech.

Signatories to the “Tech for Good Call” commit to “contribute fairly to the taxes in countries where (they) operate”; prevent the dissemination of “child sexual abuse material, terrorist or extreme violence online contents”; and “support the ecological transition”, among other things.