By Julie Martin, MNE Tax
The OECD today confirmed that it will continue its work developing a multilateral approach to the taxation of the digital economy before the end of 2020 despite US calls to delay the process.
According to press reports yesterday, the US has quit negotiating with European leaders on a digital tax update, choosing instead to threaten retaliatory tariffs on countries that impose digital services taxes. The US also said that governments should not attempt to “rush such difficult negotiations” given countries’ need to deal with the COVID-19 crisis.
In a statement today, though, the OECD said that it is mandated by the G20 to deliver a consensus-based solution by the end of 2020 on the taxation of the digital economy based on a two-pillar approach.
The OECD will maintain its schedule of meetings, offering the 130+ country collation known as the “Inclusive Framework on BEPS,” an opportunity to design a multilateral approach to the taxation of digital firms, the OECD said.
“All members of the Inclusive Framework should remain engaged in the negotiation towards the goal of reaching a global solution by year-end, drawing on all the technical work that has been done during the last three years, including throughout the COVID-19 crisis,” Secretary-General Angel Gurría said.
The Financial Times reported yesterday that US Treasury Secretary Steven Mnuchin, in a June 12 letter to UK, Spain, France, and Italy officials, said that negotiations have reached an “impasse” with respect to pillar one and that, in the time of COVID-19 crisis, governments should not attempt to “rush such difficult negotiations.”
Mnuchin said also that he hoped for agreement in the OECD-led process on pillar two, the Financial Times reported.
In his statement responding to this development, Gurría again warned that unless multilateral agreement on a way forward for digital firms taxation is achieved, countries will enact unilateral measures to tax these firms, which will in turn trigger tax disputes and trade wars.
Julie Martin
Julie Martin is the founder of MNE Tax. She edits the publication and regularly contributes articles on new developments in cross-border business taxation.
Julie has worked as a tax journalist and editor for more than 13 years. Prior to that, she worked as an in-house tax attorney in New York. She also holds an LLM in taxation from New York University School of Law.
Julie can be reached at [email protected].
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