In overture to U.S., EU’s Gentiloni says G20 deal is priority on corporate tax

During a plenary debate on recovery and resilience in the European Parliament in Brussels, Belgium, on May 18, 2021, European Commissioner for Economy Paolo Gentiloni listens to speeches. REUTERS/Francisco Seco/Pool (Reuters) – VENICE, July 10 (Reuters) – When asked if the European Union’s digital services levy plan should be postponed, European Economics Commissioner Paolo Gentiloni stated on Saturday that the goal in corporate tax reform is to move forward with a global G20 deal. The remark came after the US administration put tremendous pressure on the EU executive commission to scrap the EU’s plan for a separate fee, which some European officials questioned. “We will analyze everything,” he said, “but the essential issue from my perspective is that what we decided today is the number one priority,” he said after a conference of G20 finance ministers in Venice adopted a worldwide corporate tax pact sponsored by 132 countries. continue reading Gentiloni was asked if the EU was considering deferring its plan for a new European fee on digital services until beyond October, which had been due later in July. He went on to say that the G20 countries had committed to work on national measures with the goal of reaching a global tax agreement as the primary goal. The United States is cautious of the EU’s plan because it wants the existing national digital service tax to be repealed as part of a long-awaited worldwide revamp of cross-border corporate taxation that is taking shape at the Organization for Economic Cooperation and Development (OECD). According to one European official, the additional fee might jeopardize the broader OECD agreement, which G20 finance ministers formally accepted on Saturday. Another European source remarked, “The Commission is going to have to work this one out.” HASN’T THE PLAN FAILED? Even if the levy is primarily intended at European enterprises, US Treasury officials argue the planned EU digital levy is incompatible with the EU’s promises to stop digital levies under the OECD tax accord. Existing national digital services taxes have been challenged by Washington, which sees them as unfairly targeting Silicon Valley corporations, and it is wary of a new levy that might enrage Republican critics in Congress as it works to pass domestic tax reform. “We’re quite hopeful… that the pillar one deal, which would involve a reallocation of taxing rights (in the OECD agreement) over highly successful corporations wherever they’re located,” US Treasury Secretary Janet Yellen told journalists in Venice. Yellen is scheduled to meet with European Commission President Ursula von der Leyen on Monday, and a source close to the EU said derailing the new digital levy was a top priority for her. Brussels had so far argued that its new fee will have a much broader base than existing digital levies, mostly impacting European corporations, in order to placate the Trump administration. Officials have stated that the fee might be imposed on companies with online sales of more than 50 million euros, potentially affecting a large number of mid-sized European businesses. Officials claimed that the rates under discussion by the Commission would be less than 1%. By contrast, France’s national digital services tax, which Paris has promised to abolish once the global agreement takes effect, only applies to enterprises with global revenue of more than 750 million euros and a rate of 3%. Additional reporting by David Lawder; editing by Christina Fincher The Thomson Reuters Trust Principles are our standards./nRead More