In a significant move, French Finance Minister Bruno Le Maire said, the European Union should press ahead with plans for a digital tax in the bloc.
The call comes at a time when the OECD is weighing options which include the rewriting of international tax rules.
On Wednesday, G20 finance ministers have lent their support to extend until mid-2021 negotiations to update cross-border tax rules for the digital age after talks faced headwinds from the Coronavirus induced COVID-19 pandemic and the incoming 2020 U.S. Presidential elections.
In a statement Le Maire said, U.S. Treasury Secretary Steven Mnuchin was opposed to proposals revolving around digital taxation, since they discourage U.S. tech giants such as Google, Amazon and Facebook from legally shifting profits to low-tax rate countries such as Ireland.
Maire said, he does not expect a change in U.S. Administration would necessarily lead to a change in the U.S. position; a Bidden government might however be less aggressive with trade retaliation.
“Either one accepts an extension again for months, maybe years, or one considers that fair taxes on digital activities are urgent and in this case Europe sets the example,” said Le Maire. “We consider it indispensable that Europe sets an example and adopts digital taxation as soon as possible.”
In the absence of a global cross-border tax reforms, many countries have followed France’s lead with plans for their own national digital services tax.
While talks on the subject have been underway this year, France has suspended the collection of digital tax until December; on its part the United States has also suspended retaliatory trade tariffs on French goods until January 2021.
Although negotiation on cross border taxation have been pushed back until mid-2021, Le Maire said the French digital services tax would be collected as planned from December 2020.