WASHINGTON – The United States on Thursday reached an agreement with Austria, France, Italy, Spain and Britain that will end the threat of U.S. tariffs on certain products from those countries in exchange for the possible elimination of taxes on digital services that they had imposed on companies like Facebook, Amazon and Google.
The deal comes as more than 130 countries agreed this month on an overhaul of the international tax system that will see countries adopt a global minimum tax of 15% and change tax laws so that large multinational corporations are imposed based on where their goods and services are located. sold, rather than where they operate.
The part of the deal that applies to large corporations came in response to a global tax dispute between the United States and European countries, which in recent years have imposed taxes on digital services targeting the US giants of the economy. technology.
Thanks to the deal reached on Thursday, Austria, France, Italy, Spain and Britain will remove their taxes on digital services once this part of the global deal, known as Pillar 1, will be promulgated. This is expected to happen sometime in 2023. Taxes collected from businesses by then will be eligible for credit.
The deal is tantamount to a concession by the United States, which wanted taxes on digital services to be removed immediately once the global compact is struck earlier this month. European countries refused to do so, citing concerns over whether the United States could actually get the new tax changes through Congress in order to properly comply with the deal.
The Trump administration initially imposed tariffs on France in 2020 in retaliation for its digital services tax and has begun the process of imposing tariffs on other countries as well. The Biden administration said earlier this year it was ready to impose tariffs on those governments, but suspended action while global tax negotiations were underway.
The United States Trade Representative said Turkey and India, which also have digital services taxes that the United States wants to cancel, did not adhere to the deal reached on Thursday.