Tug of war with the USA

EU countries extend suspension of digital tax

The US Trade Representative had threatened to impose tariffs of 25 percent on imports from five European countries and Turkey because they had introduced a digital tax.(Bild: AFP)

Austria and four other European countries have reached an agreement with the USA on an extended suspension of the digital services tax. A joint statement from the office of US Trade Representative Katherine Tai together with Austria, the UK, France, Italy and Spain said that an agreement from October 2021 to suspend the threat of US retaliatory tariffs on digital taxes will be extended until June 30.

The agreement had previously been limited until the end of 2023. The extension is aimed at gaining more time for negotiations on international taxation rights for large, highly profitable companies.

The US Trade Representative had previously threatened tariffs of 25 percent on imports from the five European countries and Turkey because these countries had introduced a digital tax. According to Tai, however, the taxes on digital services are discriminatory because they are primarily aimed at US tech giants such as Facebook owner Meta, Google parent Alphabet, Amazon.com and Apple. The US has already introduced retaliatory measures against France because of its national digital tax, but has suspended them for the time being.

Status quo extended
The original agreement was a compromise. It allowed the five countries to retain their digital taxes, but they were to suspend them at least for the time being until a global tax agreement was implemented. Thursday's joint declaration now extends the status quo, so to speak, and is in line with a declaration issued by the G20 and OECD countries in December, which called for an agreement to be finalized by the end of March and signed by June 30.

In October 2021, almost 140 countries agreed on the details of a global tax reform under the umbrella of the Organization for Economic Cooperation and Development (OECD). This includes a minimum tax of 15 percent for internationally active companies. In addition, emerging countries are to receive more revenue from the world's largest corporations. The aim is to dry up tax havens and, above all, make large digital corporations more accountable.