Global tax deal gets boost as European Union delays push for digital levy

The European Union said Monday that it would postpone its push for a controversial digital levy to focus on a negotiation over a broader minimum global tax deal struck by the world’s largest economies.

The US has lobbied against the levy on digital sales that was likely to hit Silicon Valley giants’ business in Europe. The EU had pledged to introduce a levy if there was no progress on a more sweeping effort to tax corporations more uniformly. Such a pact now seems more likely after the Group of 20 endorsed the principles of a global-tax agreement.

Taxation is a hot topic in Europe with officials in Berlin and Paris taking aim at complicated structures used by multinationals, many of them American, that allow them to reduce their effective tax rates.

US Treasury Secretary Janet Yellen, who is meeting with EU officials in Brussels on Monday, had warned Sunday against “taxes that are discriminatory against US firms.” The European Commission, the EU’s executive arm, had already delayed the rollout of the plan amid pressure to withdraw it or show that it’s compatible with the global effort on how and where to tax the profits of multinational companies.

“We have decided to put on hold our work on a proposal for a digital levy,” Daniel Ferrie, a spokesman for the European Commission, told reporters on Monday. The EU will focus on the target to reach a global tax accord in October and “to conclude this process we want to concentrate all of our efforts on getting that over the line,” he said. The EU may reassess in the fall whether to push on with its levy, he said.

Over the weekend, G-20 nations agreed on the outlines of a global corporate-tax agreement.

Taxing Issues

• Digital tax delay is the latest step by the US and the EU to improve economic relations
• The EU has faced intense US pressure to postpone any announcement until a deal among the G20 
• can advance
• Meeting in Venice, G20 finance ministers on Saturday endorsed a plan agreed by 132 countries 
• to overhaul the way multinational companies, including the US digital giants, are taxed

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