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In overture to U.S., EU's Gentiloni says G20 deal is priority on corporate tax

EconomyJul 10, 2021 02:40PM ET
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© Reuters. FILE PHOTO: European Commissioner for Economy Paolo Gentiloni listens to speeches during a plenary debate on recovery and resilience at the European Parliament in Brussels, Belgium, May 18, 2021. Francisco Seco/Pool via REUTERS

By Francesco Guarascio, Leigh Thomas and Christian Kraemer

VENICE (Reuters) - The priority in corporate tax reform is to go ahead with a global G20 deal, European Economics Commissioner Paolo Gentiloni said on Saturday when asked about whether European Union's digital services levy plan may be postponed.

The remark followed intense pressure on the EU executive commission from the U.S. administration to drop the EU's plan for its separate levy, while some European officials also questioned its value.

"We will assess everything, but the key issue from my point of view is that what we decided today is the number 1 priority," he told reporters after a meeting of G20 finance ministers in Venice endorsed a global agreement on corporate tax backed by 132 countries.

Gentiloni was asked whether the EU was considering to postpone until after October its proposal on a new European levy on digital services, which has so far been expected later in July.

He added that G20 countries had agreed to coordinate on national measures keeping the global tax deal as the main objective.

The U.S. administration is wary of the EU's initiative as it wants existing national digital service tax to be repealed as part of the global overhaul of cross-border corporate taxation under a long-sought deal taking shape at the Organisation for Economic Cooperation and Development (OECD).

One European official said that the new levy risked undermining the broader OECD deal, which G20 finance ministers formally endorsed on Saturday.

"The Commission is going to have to figure this one out," another European official said.

PLAN DERAILED?

U.S. Treasury officials say that the proposed EU digital levy is not consistent with the commitments made by the EU to end digital levies in the OECD tax deal, even if the levy is largely aimed at European firms.

Washington has fought existing national digital services taxes, viewing them as unfairly targeting Silicon Valley firms, and it is loathe to see a new levy that could fire up Republican critics in Congress as it seeks to pass a domestic tax reform.

"We're very hopeful... that the pillar one deal that will involve a reallocation of taxing rights (in the OECD agreement) over large profitable firms wherever they're located, will enable us to get rid of existing digital levies," U.S. Treasury Secretary Janet Yellen told journalists in Venice.

Yellen is due to meet with European Commission President Ursula von der Leyen on Monday and one source close to the EU said it was a priority for her to derail the new digital levy.

Eager to appease the U.S. administration, Brussels had so far insisted that its new levy would have a much wider base than existing digital taxes, primarily hitting European firms.

Officials have said that the levy could be applied on companies' online sales of over 50 million euros, which could bring a wide range of mid-sized European firms into scope.

Rates that have been under consideration at the Commission would be less than 1%, officials said.

By comparison, France's national digital services tax, which Paris has pledged to scrap once the global deal takes effect, only hits companies with global revenue of more than 750 million euros in global revenue and applies a rate of 3%.

In overture to U.S., EU's Gentiloni says G20 deal is priority on corporate tax
 

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Comments (5)
Roger Miller
Roger Miller Jul 10, 2021 6:52PM ET
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Is the money any better in the hands of government? They just keep taking more and more, and that’s not even counting the inflation they create through money printing. When corporations have it it is either invested, often in government debt, or in the bank and part of bank reserves.
Thuan Bui
Thuan Bui Jul 10, 2021 6:52PM ET
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If companies actually give the profits as proper salary increases and benefits....maybe employees will be happier, spend more, less medical conditions related to stress... then maybe politicians wouldn't want to tax companies so much to use the money to give themselves nice pay checks and benefits 🤣 but at least this way, the average gets a little of something via social security or crazy stimulus
Millennial Dip Buyer
Millennial Dip Buyer Jul 10, 2021 6:52PM ET
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Thuan Bui  Funny you say that.  Entry level jobs in Canada pay more than in the US, however 'professional' careers pay significantly less, often not enough to cover basic living expenses in cities like Toronto or Vancouver.  These companies pay significant taxes and social security contributions, compared to their American counterparts.  In reality, you divide the profits of a company over a year, then by its employees(assuming they're all full time, they're not though) and it ends up being a not very significant amount of money.  Work conditions would be a much better improvement than simply shoving money at people, or having access to meaningful employment(which is the fault of government/policymakers).  Plus, those stimulus cheques were never covered and will never be covered by taxes.  They were solely covered by the Fed buying debt.
Bill Pulak
Bill Pulak Jul 10, 2021 5:23PM ET
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I personally totally back making a minimum 15% tax on big corporations. they exploit cheat and lie to get their taxes to almost no tax liability and sometimes none at all ..GE, AMZN ex....If we have to pay why shouldn't they? I am perplexed by how many regular  people are pushing against this. I think it should be higher personally? If these companies have the profits to pay ridiculous exec compensation and buy back billions of dollars of stock then they have the money to pay their fair share in tax as well.
Bill Pulak
Bill Pulak Jul 10, 2021 5:23PM ET
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Maybe most people just don't understand the tax system and how big money exploits it 7 ways to Sunday???
Forex Harbingers
Forex Harbingers Jul 10, 2021 5:23PM ET
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They offshore acct the rest. They literally pay 0, and what they do pay they get written off the next year.
Benjamin McIntire
Benjamin McIntire Jul 10, 2021 5:23PM ET
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Fox news tells them “tAx BaD” so they just switch off that part of their brains when this issue comes up and yell conspiracy theories.
Millennial Dip Buyer
Millennial Dip Buyer Jul 10, 2021 5:23PM ET
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Benjamin McIntire  Ah yes, another case of the polarized America.  Center-left variant.  Thinks everyone watches the opposing sides brand of approved news media, but is ignorant to the biases in his own.  Assumes they all don't think and listen to conspiracy theories, which is what the other side thinks of him.  Will never listen to opposing views, will always tow the party line or what his peers say.  Hilariously, at this point taxes don't really even fund anything.  We're moving closer and closer to MMT(which was heavily pushed by Bernie - likely someone you support), and taxes are moving towards a means to reduce inflation.  Is it bad that corporations don't pay their 'fair share' while Joe Schlub pays a significant portion of his income?  Yes, but not for the reasons you think.  The Average American pays significantly more of their income and has less resources to pay less taxes compared to the wealthy America.  So are taxes bad?  Yes, absolutely.  Especially with how the government spends it.
Dominic Mazoch
Dominic Mazoch Jul 10, 2021 4:56PM ET
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For this to happen i the US legally, it has to be in the form of a treaty passed by 2/3 Senate.
Millennial Dip Buyer
Millennial Dip Buyer Jul 10, 2021 4:56PM ET
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Of course, why else would the US try to convince everyone else that it's a great idea when it's unlikely to pass domestically?
Todd Gray
Todd Gray Jul 10, 2021 3:47PM ET
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all the digital stock holders ripping everybody off.
Martin Lewis
Martin Lewis Jul 10, 2021 3:27PM ET
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"The top priority of my fellow globalists here at G20 is collude to raise tax and cost of goods/services to the slaves of society."
Benjamin McIntire
Benjamin McIntire Jul 10, 2021 3:27PM ET
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We are in a global society, regardless of how you wish we werent. Dont whine about globalism until 100% of your personal footprint is domestic.
Millennial Dip Buyer
Millennial Dip Buyer Jul 10, 2021 3:27PM ET
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Benjamin McIntire  We're only in a global society because it was advantageous for the same corporations you seem to dislike to send decent paying jobs over seas so they could pay less for labour.  Those same corporations and investment funds spend an awful lot of money convincing you that it's wonderful and good for you.
 
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