EU Pauses Digital Tax Plan After US Push, but Ireland Sticks to Its Guns
The European Union has agreed to delay a corporate tax plan for the bloc following pressure from the US administration and in a bid to facilitate a broader global tax deal, but EU member Ireland reiterated its criticisms of the wider reform.
The world’s 20 largest economies endorsed on Saturday a plan for a global overhaul of corporate tax that would introduce a minimum tax rate and change the way large companies like Amazon and Google are taxed, based partly on where they sell their products and services rather than on the location of their headquarters.
The reform, if finalised in October, would need parliamentary approval in the more than 130 countries that support it, including the US Congress where it could face opposition from the Republicans. All EU member states must also approve tax reforms – including the envisioned global deal.
In an attempt to eliminate one possible hurdle to the global deal, the EU bowed to US pressure and said on Monday it would delay its own plan for a separate levy on online sales, which the US administration had feared could have led to more criticism of the global tax overhaul in the US Congress.
“We have decided to put on hold our work on our new digital levy,” EU commission spokesman Daniel Ferrie told a news conference in Brussels on Monday, noting the bloc will reassess the situation in autumn. The tax proposal had been planned for later in July.
The announcement coincided with US Treasury Secretary Janet Yellen’s visit to Brussels and followed repeated pressure from her during a G20 summit at the weekend and before.
