EU digital tax plans could be postponed and new proposals later, says top official

The European Union could postpone digital tax plans, enabling countries to spend time sorting out an agreement and avoiding a transatlantic trade war, a senior block official said.

The European Commission had previously declared that, in the case of the collapse of the OECD-hosted international talks, it will be a strategy for digital taxation by the end of 2020.

But interruption of covid-19 and US objections has prolonged the process, making it highly impossible to reach an agreement before the U.S election in November, said Commission’s director general for tax, Benjamin Angel to the European Parliament on Monday.

The director general point out that, “The difficult question that we must face collectively is when is the right moment to move with Plan B”. “We’ll have to recognize that the OECD mechanism isn’t going as quickly as we expected, while doing our utmost to help it,” he added.

EU threat lightening could ease some of the pressure on tense negotiations. Last week, in response to France’s national digital tax, the US declared tariffs of 25 per cent on a series of French products worth around $1.3 billion.

The US levies can only be placed into practice within 180 days of France temporarily suspending its tax collection until the end of the year. It basically sets up a holding pattern on both sides of the dispute until after the US vote. 

While at the same session as Mr. Angel and Pascal Saint-Amans, said that the election would not change the essence of the negotiations, as both Democrats and Republicans raised objections to digital taxation. “It’s seen in the US as an attack on American companies, while it’s seen in Europe as an attempt to get a reasonable share of the tax.,” he added.