Steven Mnuchin, Treasury Secretary, urges that individual digital tax “initiatives” be “suspended” to “facilitate a multilateral agreement” currently coordinated by the OECD, pointing out that they have “a discriminatory impact” on companies based in the country.
“We urge all countries to suspend digital tax initiatives to allow the Organization for Economic Cooperation and Development (OECD) to successfully reach a multilateral agreement,” Mnuchin said in a letter to Angel Gurría, the agency’s secretary general.
He also noted that the U.S. opposes this tax, popularly known as “Google tax” because it has “a discriminatory impact” on companies based in the country.
“We believe it is very important that the talks reach an agreement so as to prevent the proliferation of unilateral measures (…) that threaten the enduring multilateral consensus on international taxation,” he added.
Mnuchin’s letter comes just two days after U.S. President Donald Trump announced that he will impose tariffs of up to 100 percent of the value of certain French imports, valued at a total of $2.4 billion.
Trump’s decision came in response to the application of a tax in France on the income from digital services of major technology, such as Google and Facebook.
The 3% French tax affects companies whose annual revenues exceed 750 million euros worldwide (about 845 million dollars), so that some 30 companies could be affected, most of them American, although the list also includes Chinese, British and German firms.
After it came into force, the USTR, the agency responsible for the country’s foreign trade policy, announced the initiation of an investigation against France for its tax on technology on the grounds that it was “unfairly” targeting American giants.
The OECD presented a report in October in which it proposes that large corporations tax where their users are, regardless of the fiscal domicile of the companies.
In this way, big technology companies such as Google, Apple, Facebook or Amazon would pay part of their taxes in the markets where they generate their profits, which have been accused of using tax engineering mechanisms to locate their headquarters in low tax countries and thus reduce their tax obligations.