US calls taxes on web giants ‘discriminatory’

A US Treasury official has criticised the EU’s proposal to introduce a digital tax, describing the measure as “discriminatory” against US tech companies.

Reuters reported that Chip Harter, the US Treasury’s top international tax official, said such taxes were “ill-conceived,” and said it was better to pursue broader international tax reform at the Organisation for Economic Co-operation & Development (OECD).

Digital service tax

A number of countries including Britain, Spain, and Italy plan to move with ahead with their own version of the “digital services tax”. Australia is also planning to introduce a similar tax as well.

“The challenges facing the international tax system are just far broader than how to tax social media and search engines,” Harter said.

Some countries find it unfair that large digital companies can generate profits in countries with the lowest taxes, regardless of the location of the customer.

“The United States opposes any digital services tax proposals, whether they be French or from the UK,” Harter said. “What we have seen of the most recent French proposals, we view them as highly discriminatory against US businesses… Various parts of our government are studying whether that discriminatory impact would give us rights under trade agreements, or WTO, treaties,” he added.

Although he said he would prefer a broader international deal, French finance minister, Bruno Le Maire, said France would bring out a bill next month.

“The best is to reach a consensus at the OECD because once there is an international tax, France will withdraw its tax at the national level,” Le Maire said.

Global reform

Global reform of international tax rules has been debated for a number of years, but progress has been slow.

Around 127 countries and territories came to a decision at the beginning of the year that any revision of a global tax rules should tackle some of the most controversial issues, such as how to divide up the right to tax digital firms’ cross-border income between countries.

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