Joe Biden loses patience with EU: Brussels panic as US turns on bloc over new plan
Rishi Sunak praises G7 corporate tax agreement
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US diplomats are piling pressure on European capitals to scrap the looming proposals amid fears it will clash with a tentative global deal on corporate taxation. Janet Yellen, the US Treasury Secretary, has dismissed the EU’s claim its scheme can work in harmony with the G7 tax deal for a global minimum rate of at least 15 percent. A US diplomat note urged Brussels to delay the bloc’s attempt to create a digital levy, according to the Financial Times.
Washington argued the go-it-alone approach would “threaten” parallel talks on rewriting corporation tax taking place at the Organisation for Economic Co-operation and Development.
“The timing of this proposed levy would risk entirely derailing the tax negotiations as a sensitive juncture,” the memo states.
Ms Yellen is likely to deliver the warning to EU tech chief Margrethe Vestager when they hold talks later today.
She will also travel to the Belgian capital to meet EU finance ministers next week.
The issue of slapping new taxes on US tech giants such as Amazon, Google and Facebook has plagued transatlantic relations since Donald Trump’s presidency.
The European Commission has said its plan to agree an EU digital tax is compatible with the OECD bid to rewrite tax rules for multinational firms.
Officials claim it will likely be a one percent rate on hundreds of companies that have digital operations in Europe.
Ms Vestager has described the plan as more of a “levy” than a tax.
Brussels has been forced to devise new plans for a digital tax along with a series of other fund-raising tools to help pay back hundreds of billions of euros wracked up as part of its coronavirus recovery fund.
Ms Yellen will likely have to do little to convince a host of EU governments to move to scrap the EU digital tax plans.
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A number of diplomats have suggested the proposals have already been usurped by the OECD negotiations.
They add that the EU proposals – which need unanimous support from member states – are likely to be dead on arrival.
But Ireland, Hungary and Estonia have so far refused to sign up to the global deal, setting up a potential EU clash with larger member states.
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Dublin expressed concern over the plan for a 15 percent minimum tax rate but said it was “committed to the process”.
Hungary and Estonia say the proposals violate EU law at it requires countries where large companies are based to apply that minimum rate on subsidiaries in lower tax areas.
The EU is confident it can win over the countries in the coming months, to pave the way for meeting an October target for an OECD deal.
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