Ireland handed boost in European Union digital tax scheme battle

Finance Minister Paschal Donohoe said the proposed new digigal tax would set a negative precedent for Europe

Finance Minister Paschal Donohoe said the proposed new digigal tax would set a negative precedent for Europe

On Monday, Le Maire's German counterpart Olaf Scholz backed a European tax, but only if worldwide moves in the the Organisation for Economic Co-operation and Development (OECD) had failed by 2020.

France has offered to delay an EU-wide tax on tech giants in a bid to salvage the levy, which faces fierce opposition from Ireland and the Nordic countries, in an embarrassing setback for Emmanuel Macron in Brussels. The US is fuming that it would unfairly target America's internet industry, and German industry leaders have warned it will hurt their own businesses.

The EU isn't the only governing body considering a digital tax.

Germany, which initially had backed the plan, urged for the first time a revision that would exclude from the scope of the new tax activities that could be linked to carmakers. After the United Kingdom announced its tax last week, Representative Kevin Brady, a Republican from Texas, called the measures troubling and would prompt a review of the USA tax and regulatory approach to "ensure a level playing field in global markets". Scholz has been at pains to make clear he's not against a digital tax per se, declaring it's just a question of what form it should take. The tax will only apply to companies that generate more than £500m a year in global revenues.

European Union governments are divided over a plan to tax big internet firms like Google and Facebook on their turnover, fearing retaliation from the United States, and could delay its application until a global deal is reached, top officials said on Tuesday.

The proposed launch date of 2021, provided no OECD deal is reached by then, would be a "face-saving solution" for everyone, said one German government official.

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Arriving at the meeting Tuesday in Brussels, the Danish minister of Finance, Kristian Jensen, said of his side: "Everything is possible in politics but I think that it is very hard to reach an agreement on the taxation of the digital economy".

Finance Minister Bruno Le Maire said before Tuesday's meeting that France is now flexible on the implementation date.

EU states are discussing two options put on the table by the European Commission.

The opponents of the tax could live with it because it isn't imminent, while supporters could claim they're putting the OECD under pressure to reach a global solution.

The OECD may also warm to the idea. He told reporters yesterday that he thought a "different solution" to the EU's plan would emerge from OECD. "It's our aim to get the US, China and India on board as well", he said.

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