USA pulls out of Digital Tax talks

Jun 22, 2020

The USA has withdrawn from the international talks on taxing the digital economy, led by the OECD. This follows the earlier announcement that the United States will conduct investigations into digital services taxes introduced or are being considered by a number of countries, including Austria, Brazil, the Czech Republic, India, Indonesia, Italy, Spain, Turkey, the UK along with the EU.  

According to reports, when asked about the decision, The US Trade Representative, Robert Lighthizer said “We have a situation where a variety of countries have decided that the easiest way to raise revenue is to tax somebody else’s companies and they happen to be ours,” and “The United States will not let that happen”. He also said that “The answer is that we need an international regime that not only focuses on certain size and certain industries but where we generally agree as to how we’re going to tax people internationally,” he said. “So I think there is clearly room for a negotiated settlement.” 

In response to the US decision, The OECD Secretary-General Angel Gurría said “All members of the Inclusive Framework should remain engaged in the negotiation towards the goal of reaching a global solution by year end, drawing on all the technical work that has been done during the last three years, including throughout the COVID-19 crisis. Absent a multilateral solution, more countries will take unilateral measures and those that have them already may no longer continue to hold them back. This, in turn, would trigger tax disputes and, inevitably, heightened trade tensions. A trade war, especially at this point in time, where the world economy is going through a historical downturn, would hurt the economy, jobs and confidence even further.” 

The OECD has confirmed it will maintain its schedule of meetings to offer all members of the Inclusive Framework a place in the design of a multilateral approach.