US, India and Saudi Arabia Are Blocking OECD-led Pillar One, French Finance Minister Says
EU Should Prepare Its Own Digital Service Tax (DST) on Multinational Technology Firms
The United States, India and Saudi Arabia are blocking the OECD-led Pillar One tax reform plan, French Finance Minister Bruno Le Maire said on 20 February 2023, so the European Union should prepare to levy its own (DST) on multinational technology companies.
Speaking before the upcoming First Finance Ministers and Central Bank Governors meeting under the G20 Indian presidency in Bengaluru on 24-25 February 2023, Le Maire told a press conference that "[a]s of today things are blocked, in particular by the United States, Saudi Arabia and India" and the "chances of success are slim".
The French government has long said that if G20 countries were unable to achieve agreement on the topic, the EU must take the matter into its own hands. "I think we're at that point now", he said.
France previously made the decision to create a national tax on multinational tech companies revenues and announced several years ago that it would phase out its domestic DST only once the OECD-led global tax reform was fully implemented (for prior coverage see Digital Services Tax to Remain until Global Tax Reform Is Implemented, Says French Minister of Finance (1 December 2021)). The French DST reportedly brings in nearly EUR 700 million to the country.
Le Maire was referring to the OECD-brokered pact that 136 Inclusive Framework countries agreed to in October 2021 that envisaged implementing a two-pillar solution towards addressing the tax challenges arising from the digitalization of the economy, which G20 countries also supported (for prior coverage, see Vast Majority of Inclusive Framework Members Sign Up To Landmark Global Tax Reform (11 October 2021)). Since then, the two-part plan has faced stiff opposition by Republican lawmakers in the US Congress and criticism from certain other jurisdictions.
As for negotiations on the OECD's Pillar Two, "things have progressed well", said Le Maire, noting that it "could be implemented in the coming months".
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