Trump escalates fight over tech tax
Treasury Secretary Steven Mnuchin is raising concerns about ideas being considered in international discussions over how to address the tax challenges of the digital economy.
Mnuchin said in a letter Tuesday to the Organization for Economic Cooperation and Development (OECD), the group holding the discussions about international tax rules, that the U.S. has “serious concerns” about potential mandatory departures from “longstanding pillars of the international tax system upon which U.S. taxpayers rely.”
The letter comes after the U.S. Trade Representative (USTR) on Monday found that France’s digital services tax is discriminatory and proposed tariffs of up to 100 percent on $2.4 billion in French products. The USTR also said that it’s considering opening investigations into digital services taxes in other countries.
U.S. policymakers and tech companies have criticized countries interested in country-specific digital services taxes, arguing that they unfairly target American tech businesses. They have instead been hoping that the OECD can reach an agreement on international tax rules. The OECD is hoping to come out with an agreement by the end of next year to prevent more countries from acting unilaterally.
In his letter, Mnuchin said that the U.S. “firmly opposes” digital services taxes, arguing that they’re inconsistent with the principles in current international tax rules. He urged “all countries to suspend digital services tax initiatives, in order to allow the OECD to successfully reach a multilateral agreement.”
The long-running fight between the U.S. and Europe over how to tax American tech giants is heating up.
The Trump administration on Monday proposed retaliating against France for a tax on digital services, floating $2.4 billion in tariffs, and Paris is vowing to hit back.
The dispute is raising pressure on international negotiators to develop a framework for taxing tech companies whose businesses span the globe. But as the complicated talks unfold, the U.S. is threatening to launch more investigations.
The tech industry has pushed back aggressively at all efforts to impose digital taxes on a region-by-region basis, claiming that it would be unfair to “double-” or “triple-tax” U.S. companies offering free services around the world.
CompTIA, a tech trade group, said in a statement that its membership “strongly opposes the [digital services tax] and those proposed like it.”
“This discriminatory tax targets many of the world’s most innovative companies by taxing their profits twice and will ultimately harm job and economic growth in France and elsewhere,” said Cinnamon Rogers, CompTIA’s executive vice president of advocacy.
The Organization for Economic Cooperation and Development (OECD) has been working to develop solutions to address tax challenges in the digital economy. The group, which includes the U.S. and France, is aiming to reach an agreement by the end of next year in order to prevent more companies from acting unilaterally.
The tech industry has thrown its support behind the OECD process, which will help them avert the prospect of facing separate taxes from a variety of countries.
“I’d just hope that with the stakes being as clear as they are, this sense that there could be a multiyear conflict around all of this, that just puts the OECD negotiation appropriately in the correct light,” said Jennifer McCloskey, vice president of policy at the Information Technology Industry Council, a trade group that represents Amazon, Apple and Google.