Opening in US, EU Gentiloni Says G20 Agreement Priority Over Corporate Tax
- The EU under pressure from Washington, Europe on a new digital tax
- G20 approves global agreement on corporate taxation
- Gentiloni seems open to postponing EU plan
VENICE, July 10 (Reuters) – The priority for corporate tax reform is to move forward with a global G20 deal, Economic Commissioner Paolo Gentiloni said on Saturday when asked him if the European Union’s digital services levy plan could be postponed.
The remark follows intense pressure by the US administration on the EU Executive Board to drop the EU’s plan for its separate levy, while some EU officials have also questioned its value. .
“We will assess everything, but the key question from my point of view is that what we decided today is priority number 1,” he told reporters after a meeting of G20 finance ministers in Venice approved a global corporate tax agreement backed by 132 countries read more.
Gentiloni was asked whether the EU plans to postpone until after October its proposal on a new EU digital services tax, which has so far been expected later in July.
He added that the G20 countries had agreed to coordinate national measures keeping the global tax agreement as the main objective.
The US administration is wary of the EU initiative because it wants the existing national tax on digital services to be repealed as part of the global overhaul of cross-border business taxation as part of a long-sought deal taking shape at the Organization for Economic Co-operation and Development (OECD).
A European official said the new tax risked undermining the broader OECD agreement, which G20 finance ministers formally endorsed on Saturday.
“The Commission is going to have to find a solution,” said another European official.
U.S. Treasury officials say the digital tax proposed by the EU is not in line with the EU’s commitments to end digital taxes in the OECD tax deal, even though the tax is largely aimed at consumers. European companies.
Washington has fought against existing national taxes on digital services, seeing them as unfairly targeting Silicon Valley companies, and it hates to see a new levy that could ignite Republican critics in Congress as it seeks to pass national tax reform .
“We very much hope (…) that the agreement on the first pillar which will involve a reallocation of taxing rights (in the OECD agreement) on large profitable companies, wherever they are located, we will allow us to get rid of existing digital taxes, “he added. US Treasury Secretary Janet Yellen told reporters in Venice.
Yellen is due to meet with European Commission President Ursula von der Leyen on Monday and a source close to the EU said it was a priority for her to derail the new digital tax.
Eager to appease the US administration, Brussels had so far insisted that its new tax would have a much broader base than existing digital taxes, mainly hitting European businesses.
Officials said the tax could be applied to online sales of businesses over â¬ 50 million, which could include a wide range of mid-sized European businesses.
The rates that have been examined at the Commission are said to be below 1%, officials said.
By way of comparison, the national tax on digital services, which Paris has pledged to abolish once the global agreement comes into force, only hits companies with global turnover exceeding 750 million euros and applies a rate of 3%.
Additional reports by David Lawder; Editing by Christina Fincher
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