UNITED KINGDOM – Europe’s leaders are united and determined to levy digital services taxes on major US tech companies in the upcoming months even as US President Donald Trump pulled out the tariff card.
Finance Ministers of France, Italy, and the United Kingdom reportedly signified their intentions to push ahead with the decision to tax American tech companies like Amazon, Google, and Facebook if a global solution can’t be agreed on.
Roberto Gualteri, the Economy and Finance Minister of Italy, recently told CNBC that even though they will proceed with the digital taxes, they remain “very committed” to finding a solution to the issue. He added that companies don’t have to pay now, and that the tax is designed with a sunset clause that will automatically expire if an acceptable global solution is implemented.
European countries have been vocal against tech companies generating massive revenue from consumers in the region but paying minimal taxes. The digital tax being introduced would raise millions of euros and sterling for these countries.
France had announced that it would set a 3% tax on sales generated by social media platforms, search engines, online marketplaces, and other tech services. Italy will also levy a 3% tax while the UK has settled on 2%.
However, the US is against the tech tax as it reportedly targets American companies. Both President Trump and Treasury Secretary Steven Mnuchin warned of retaliatory measures if the tax pushes through.
During a recent panel discussion in Davos, Mnuchin said the US government would tax car companies if Europe would “arbitrarily put taxes on our digital companies.”
Tariffs on the automobile industry could be harsh on the region as a large part of its economy is derived from this sector.
It’s not the first-time Trump threatened Europe with tariffs, but nothing came out of it as Washington opted to concentrate on its trade issues with China. But now that a deal has been agreed on, Trump appears to be setting his eyes on the EU again.
The specter of digital taxes has caused some tension in Davos, but France’s recent concession to delay collecting said levies on international tech companies until the end of 2020 has alleviated some of that. In return, the US has agreed not to implement new tariffs this year too.
Britain’s Treasury Secretary Sajid Javid has stated that they’re sticking to the scheduled digital services tax in April. However, Mnuchin’s recent comments about a US-UK trade deal to be completed has placed more pressure on the country to reconsider its plan to continue with the tech taxes.