EU hopes US pullout of digital tax talks not 'definitive'

BRUSSELS: EU commissioner for economic affairs Paolo Gentiloni on Thursday said that he hoped Washington's decision to stop international negotiations on the taxation of tech giants would not be permanent.

"I very much regret the US move to put the brakes on international talks on taxation of the digital economy. I hope that this will be a temporary setback rather than a definitive stop," he said in a statement.

Washington on Thursday angered its OECD partners by announcing it was pulling out the talks that are intended to make tech giants such as Google or Facebook pay more tax.

In the OECD talks, 137 countries agreed in January to reach a deal on the taxation of multinationals by the end of 2020.

The EU had attempted its own European version of the digital tax, but struck by internal divisions on the issue, put those plans aside in order to pursue the international solution.

"The European Commission wants a global solution to bring corporate taxation into the 21st century -- and we believe the OECD's two-pillar approach is the right one," Gentiloni said . "But if that proves impossible this year, we have been clear that we will come forward with a new proposal at EU level," he said.

An EU-wide tax is however no sure thing, however, given the bitter opposition of Ireland, which is the EU headquarters for several US tech giants, including Facebook and Apple.

Tax affairs require unanimity among the EU's 27 member states.

Given the difficulty, several European countries -- including Austria, Spain, Hungary and Italy -- have launched their own plans for a digital services tax.

Gentiloni said Brussels would stand behind any of its member states that would receive trade sanctions by the US over the digital tax issue.

France imposed a tax on large digital companies in 2019, but in retaliation, Washington threatened to impose tariffs on the equivalent of $2.4 billion of French goods.

A truce was worked out pending the outcome of the OECD deal.

But earlier this month, the US announced investigations into Austria, the Czech Republic, Italy, Spain and non-EU Britain that could also lead to more tariffs.