Nearly 140 countries are currently negotiating the first major rewrite of international tax rules in a generation to account for the rise of big digital companies such as Amazon, Google, Facebook and Microsoft.
With a blueprint for a deal due from the Organisation for Economic Cooperation and Development (OECD) next month, the aim of reaching an agreement by a year-end deadline is looking increasingly challenging.
Speaking to reporters at a meeting of European finance ministers in Berlin, France’s Bruno Le Maire said he wanted to have a fair and efficient international taxation system as soon as possible, ideally within the OECD framework.
“If you look at the consequences of the economic crisis, the only winners are the digital giants,” Le Maire said.
“If it proves to be impossible to get a consensus by the end if this year at the OECD level, we should have, by the beginning of next year, 2021, a European solution for digital taxation.”
France already has a tax on digital services, but has suspended it until the end of the year to avoid a clash with the United States, where the biggest digital firms are located, and to give the OECD time to work out a global solution.
But huge pressure on public finances all over the world from the effects of the COVID-19 pandemic has brought the digital tax issue back to the fore and most EU countries would welcome it, although some are wary of Europe going it alone.
A digital services tax is also very important for the EU as one of the ways to repay huge joint borrowing to finance economic recovery after the pandemic-induced recession, and has the backing of Germany.
“We will work to make it feasible that a global consensus on this question can be reached,” German Finance Minister Olaf Scholz said.