PARIS (AFP) – Global tax plans targeting billionaires and multinational companies are running aground, with the United States (US) torpedoing reforms under President Donald Trump.
The billionaire real estate tycoon has pulled the US out of an international deal on taxing multinationals and threatened tariffs on countries that target US tech giants.
Countries have accused Amazon, Microsoft, Google owner Alphabet and Facebook’s parent company Meta of sidestepping local taxes.
Trump issued a warning on February 21 to countries that would hit big tech and other US companies with fines or taxes that are “discriminatory, disproportionate” or designed to transfer funds to local companies.
“My administration will act, imposing tariffs and taking such other responsive actions necessary to mitigate the harm to the US,” he said in the memo.
The move re-opens a rift between Washington and its allies over taxing digital services.
During his first term, Trump threatened to slap tariffs on US imports of French products after France rolled out a digital services tax in 2019.
Seven other countries have followed France’s lead since then.
The tax generated EUR780 million (USD887 million) for the French government last year.
Now the European Union (EU) is threatening to impose a tax on digital services if negotiations fail over Trump’s plans to impose 20 per cent tariffs on EU goods.
Britain, which is hoping to strike a trade deal with the US, may reconsider its own digital levy, which currently brings in GBP800 million annually.
British Trade Secretary Jonathan Reynolds has said the digital tax is not “something that can never change or we can never have a conversation about”.
Nearly 140 countries struck a deal in 2021 to tax multinational companies, an agreement negotiated under the auspices of the Organisation for Economic Co-operation and Development (OECD).
The OECD agreement has two “pillars”.
The first provides for the taxation of companies in countries where they make their profits, a move aimed at limiting tax evasion. It primarily targets tech giants.
