European Tech Tax Push by France Resisted as Global Deal Sought

European Tech Tax Push by France Resisted as Global Deal Sought
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Europe’s plan to tax large digital companies hit resistance at a meeting of the bloc’s finance ministers as delegates tussled between a French-backed push for a quick regional agreement and calls for a global solution, according to Bloomberg.

Ministers gathered in Sofia, Bulgaria, to discuss a European Union proposal aimed at ensuring technology giants pay their fair share in tax, amid growing public anger that they’re benefiting from an outdated framework that struggles to deal with virtual businesses. Yet despite France’s call for agreement by the end of the year, some nations urged a broader solution to ensure a level-playing field and avoid further straining transatlantic ties. That, however, would require the consent of the U.S., which has so far been critical of the EU’s plans.

The U.K., one of the original proponents of a European tax, dealt a further blow by shifting its position during the meeting, according to officials familiar with the discussions. It allied with those arguing that the bloc shouldn’t raise expectations, and which are concerned about a likely retaliation from the U.S.

Large EU countries have called for the EU to look into methods to tax firms such as Amazon and Facebook in a way that better captures the true value created. Any tax proposal will need the unanimous approval of all EU members before becoming law, meaning a single country could block it. Smaller countries have argued that the bloc risks putting itself at a competitive disadvantage unless a global deal is reached.

The European Commission presented a proposal in March for a targeted 3 percent levy on sales, which would increase the tax bill large technology companies face. That would be an interim solution for the commission, which also put forward a more comprehensive longer-term approach to enable countries to tax profits made in their territory even if the firm doesn’t have a physical presence there.

That plan would cover large companies offering services such as advertising or the sale of user data. It would also cover multisided platforms, which let users find and interact with each other and where users supply goods and services directly to each other. In an effort to overcome disagreements over the interim tax, the Organization for Economic cooperation and Development, which advises its 35 member countries on tax policy, may bring forward a global technology-tax blueprint that it’s developing.