US Warns of WTO Action Over ‘Discriminatory’ New Digital Taxes
The U.S. is weighing a complaint at the World Trade Organization against “discriminatory” new taxes on digital giants such as a Facebook and Google which are being planned by France and other EU nations, a top US trade official said Tuesday.
“We think the whole theoretical basis of digital service taxes is ill-conceived and the effect is highly discriminatory against US-based multinationals,” Chip Harter, a Treasury official and US delegate for global tax talks, said in Paris.
Speaking ahead of two days of talks at the Organization for Economic Cooperation and Development (OECD), Harter added that “various parts of our government are studying whether that discriminatory impact would give us rights under trade agreements and WTO treaties.”
The OECD is spearheading talks aimed at forging a new global agreement on taxing technology and digital giants who often declare their income in low-tax nations, depriving other countries of billions in revenue.
But that overhaul is expected until next year at the earliest, prompting France, Britain, Spain, Austria and Italy to move ahead with their own versions of a so-called “digital services tax” as soon as this year.
Last week France unveiled draft legislation that would set a 3.0-percent levy on digital advertising, the sale of personal data and other revenue for tech groups with more than 750 million euros ($844 million) in worldwide revenue.
It would be applied retroactively from January 1, 2019, while the measures in the UK and other European countries might not come into effect until next year.
“We do understand there’s political pressure around the world to tax various international businesses more heavily, and we actually agreed that that is appropriate,” Harter told journalists.
“But we think it should be done on a broader basis than just selecting a particular industry,” he said.
