Yellen Boosts European Optimism for Global Digital Tax Accord

German Finance Minister Olaf Scholz said President Joe Biden’s administration has shown a readiness to clinch an agreement on how to tax global tech companies, potentially overcoming an American block and paving the way for an accord later this year.

Scholz, who spoke with Janet Yellen on Wednesday, told a video conference at the Organization for Economic Cooperation and Development that the U.S. Treasury secretary had indicated a “big willingness” to find a global solution on tax rules in the short term.

Resolving the dispute hinges on years-long negotiations between around 140 countries that repeatedly stumbled as President Donald Trump’s administration made demands that were unacceptable to other parties. Frustrated by the lack of progress on rules to allocate what profits can be taxed and where, European countries introduced blunt taxes on revenues, which the U.S. responded to by preparing retaliatory tariffs.

Yellen Boosts European Optimism for Global Digital Tax Accord

“It is now time to get agreement on how to tax digital businesses,” Scholz said on Thursday. “I’m very confident we will be able to do it.

Confident, Optimistic

U.K. Chancellor of the Exchequer Rishi Sunak, who has also spoken with Yellen, said he is “highly confident and optimistic” that a multilateral solution can be found this year.

Yellen Boosts European Optimism for Global Digital Tax Accord

Some countries, including France and Italy, have already moved forward with their own taxes on digital revenue, with the understanding that they would rescind them if a global deal is reached.

“There is the willingness for an agreement by the U.S. and we must use the chance,” Italian Finance Minister Roberto Gualtieri told the conference.

The European Union’s trade chief, Valdis Dombrovskis, said earlier this month that if the OECD effort fails, the bloc would offer a proposal by the middle of the year for an EU-level digital levy.

©2021 Bloomberg L.P.

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