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| 1 minute read

Pressure mounting for global consensus on Digital tax by end of year

As the Democratic caucuses go into top gear, with the Nevada count underway this evening, the prospect of a US Presidential Election in 2020 must be weighing heavily on the minds of those who are hoping to avoid confrontation with the U.S. over proposals for a Global digital tax.

Emboldened by his acquittal in impeachment proceedings recently, President Donald Trump is looking increasingly like a shoo in for a second term at the White House. Will he be seeking to burnish his ‘America First’ credentials, by mounting a typically brash defence of those American corporations which will bear the brunt of any global digital tax initiative? Treasury secretary Steve Mnuchin has already made the American position clear in that it considers American companies should retain an option, in effect, to choose the tax system to minimize tax, expressed as a ‘safe harbor’ option where companies ‘would agree to pay more in exchange for having more certainty over their tax bills.’ In describing the proposed global tax measures as ‘discriminatory’, Treasury secretary Mnuchin has also poured cold water on the prospect of a deal being done this year.

With ten months to go to the deadline imposed by OECD negotiators, the negotiations on the future trading relationship between the EU and the UK will not be the only ones to watch keenly in 2020.

The O.E.C.D. has been trying to head off a proliferation of disparate tax regimes around the world and has been leading negotiations over the last year for an international overhaul that would allow countries to tax certain digital service providers even if they lack physical operations inside their borders.

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