EU puts digital levy plans on hold in face of US criticism

Jul 12, 2021, 4:41 AM | Updated: Jul 15, 2021, 1:28 am

U.S. Treasury Secretary Janet Yellen, center, poses for a group photo of eurogroup finance minister...

U.S. Treasury Secretary Janet Yellen, center, poses for a group photo of eurogroup finance ministers at the European Council building in Brussels on Monday, July 12, 2021. (AP Photo/Virginia Mayo)

(AP Photo/Virginia Mayo)

BRUSSELS (AP) — In a gesture of goodwill to the United States, the European Union on Monday put work on plans for a digital tax levy on hold for the moment to concentrate on finalizing the historic tax decision endorsed by the Group of 20 nations over the weekend.

In the face of criticism from U.S. Secretary of the Treasury Janet Yellen, the European Commission said its work on the levy that would hit American technology companies would go on ice to allow for smooth cooperation on the political and technical hurdles that still need to be addressed on the G-20 tax decision before the end of October.

“We will work together to reach this global agreement,” said EU Economy Commissioner Paolo Gentiloni. “I informed the Secretary Yellen of our decision to put on hold the proposal of the Commission of a digital levy to allow us to be concentrated, working hand-in-hand, to achieve the last mile of this historic agreement.”

Finance ministers from the G-20 major economies endorsed a global minimum corporate tax of at least 15%, a measure aimed at putting a floor under tax rates and discouraging companies from using low-rate countries as tax havens.

The global minimum proposal faces political and technical hurdles before it takes effect. Details are to be ironed out in coming weeks at the Organization for Economic Cooperation and Development in Paris, followed by a final endorsement by G-20 presidents and prime ministers at an Oct. 30-31 meeting in Rome.

Countries then need to legislate the rate into their own laws. The idea is for countries where firms have their headquarters to tax those companies’ foreign earnings at home if those earnings go untaxed in low-rate countries. That would remove the reason for using complex accounting schemes to move profits to subsidiaries in low-tax nations, and where the companies may do little or no actual business.

In addition, the EU has also tried to focus on companies that make profits in countries where they have no physical presence, such as through digital advertising or online retail. Countries led by France have started imposing unilateral “digital” taxes that have hit the biggest U.S. tech companies, including Google, Amazon and Facebook.

The U.S. calls those unfair trade practices, and has threatened retaliation through import taxes.

Germany also focused more on the global corporate tax measures agreed upon than on EU plans for digital taxation.

“The most important step is that we have an agreement on a global minimum tax and that we also have an agreement on how we better tax big high-profitable companies, including those that are active as global digital giants,” said German Finance Minister Olaf Scholz. Because of that, he said that not pushing ahead now with EU-only plans “is also a sign that we are really making the progress to get a global agreement.”

The European Commission’s announcement came as Yellen was meeting in Brussels with eurozone counterparts and high-level EU officials.

Copyright © The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.


Sen. Tommy Tuberville, R-Ala., listens to a question during a news conference, March 30, 2022, in W...

Associated Press

Tuberville is ending blockade of most military nominees, clearing way for hundreds to be approved

Sen. Tommy Tuberville announced Tuesday that he's ending his blockade of hundreds of military promotions, following heavy criticism.

7 hours ago

An employee works inside the Hanwha Qcells Solar plant on Oct. 16, 2023, in Dalton, Ga. On Tuesday,...

Associated Press

US job openings fall to lowest level since March 2021 as labor market cools

U.S. employers posted 8.7 million job openings in October, the fewest since March 2021, in a sign that hiring is cooling.

8 hours ago

Megyn Kelly poses at The Hollywood Reporter's 25th annual Women in Entertainment Breakfast, Dec. 7,...

Associated Press

The fourth GOP debate will be a key moment for the young NewsNation cable network

By airing the fourth Republican presidential debate, NewsNation network will almost certainly reach the largest audience in its history.

9 hours ago

Lead water pipes pulled from underneath the street are seen in Newark, N.J., Oct. 21, 2021. (AP Pho...

Associated Press

Biden to require cities to replace harmful lead pipes within 10 years

The Biden administration has previously said it wants all of the nation's roughly 9 million lead pipes to be removed, and rapidly.

5 days ago

Facebook's Meta logo sign is seen at the company headquarters in Menlo Park, Calif., on, Oct. 28, 2...

Associated Press

Meta shuts down thousands of fake Facebook accounts that were primed to polarize voters ahead of 2024

Meta said it removed 4789 Facebook accounts in China that targeted the United States before next year’s election.

5 days ago

A demonstrator in Tel Aviv holds a sign calling for a cease-fire in the Hamas-Israel war on Nov. 21...

Associated Press

Hamas releases a third group of hostages as part of truce, and says it will seek to extend the deal

The fragile cease-fire between Israel and Hamas was back on track Sunday as the first American was released under a four-day truce.

10 days ago

Sponsored Articles

Follow @KTAR923...

West Hunsaker at Morris Hall supports Make-A-Wish Foundation in Arizona

KTAR's Community Spotlight this month focuses on Morris Hall and its commitment to supporting the Make-A-Wish Foundation in Arizona.


Midwestern University

Midwestern University: innovating Arizona health care education

Midwestern University’s Glendale Campus near Loop 101 and 59th Avenue is an established leader in health care education and one of Arizona’s largest and most valuable health care resources.



Key dates for Arizona sports fans to look forward to this fall

Fall brings new beginnings in different ways for Arizona’s professional sports teams like the Cardinals and Coyotes.

EU puts digital levy plans on hold in face of US criticism