EU expected to delay special tax on tech

The European Commission is likely to delay putting forward its plans for a digital levy until the autumn to try to improve the chances of a global corporate tax reform deal, the Financial Times reported on Sunday.

The European Commission had come under pressure from US Treasury Secretary Janet Yellen to shelve its digital tax proposal, the newspaper said, citing people familiar with the discussions. The US position is that the global corporate tax reform deal takes precedence and obviates the need for the digital tax.

The levy, to fund Europe’s recovery from the Covid-19 pandemic, would apply to hundreds of companies in the digital economy, the majority of them European, its executive vice-president Margrethe Vestager said this month.

“If we can get this fully endorsed and implemented and tax authorities have the resources actually to claim the taxes, well, then some of the companies which pay very little or nothing in taxes today, they will contribute in the societies where they do their business,” she told Reuters.

“Where the OECD agreement is for the 100 biggest companies, this is for many, many more companies,” she said, adding that the levy would mostly affect European firms but others would also be affected.

She declined to provide details on which companies would be affected or the size of the levy.

“The commission is reflecting on how to support the historic G20 deal. In that context we are considering a possible postponement to the autumn of the detailed proposal on the digital tax,” an unidentified official told the newspaper.”

The official stressed the final decision had not yet been taken and would be subject to discussion when commission president Ursula von der Leyen meets Yellen on Monday, the newspaper said.