Brussels decided to stop its proposal to The Google The European Union after the principle of the agreement reached by the Group of Twenty to set a minimum tax on multinational companies. A community spokesperson said Monday that the European Commission has decided to “suspend” its work, which was due to be presented next week, to focus on finalizing the design and the agreed global tax deployment plan in Venice. The announcement coincides with a visit to Brussels by US Treasury Secretary Janet Yellen, who was urging the European Union to reverse its plans to tax big tech business. In her meeting with community club finance ministers, Yellen asked them to “seriously” consider taking “additional fiscal measures” to ensure economic recovery.
The European Union decided to make a gesture with Washington and postpone its proposal to impose a tax on the activity of technology companies. The tax, already created in Spain or France, should be one of the ways to cover the 800 thousand million euros from the recovery fund that the Commission will launch this summer. Brussels wanted technology companies, which continue to escape from the coffers of most EU partners, to bear part of the cost of economic reconstruction, as they were the biggest winners from the pandemic.
The United States opposed the tax from the start, seeing it as discriminatory. He has been rejected by former President Donald Trump, but also by the current Joe Biden administration, which understands that the agreement expected to be reached within the framework of the Organization for Economic Co-operation and Development in October actually resolves Brussels’ concerns. Yellen reiterated over the weekend that the agreement, which will take effect in 2023, indicates the rate is redundant. “It is up to the Commission and EU members to decide the way forward,” he said during his press conference in Venice.
In an apparent gesture towards the United States, Brussels announced that it will not introduce that financial package next week. And it won’t, according to a commission spokesperson, until the OECD tax design process is complete next October. Community officials will be able to pass this news on to Yelin, who according to Bloomberg She goes to Brussels ready to put pressure on the institutions to abandon this tax.
On Monday, the US Treasury Secretary met European Central Bank President Christine Lagarde. With the President of the European Commission, Ursula von der Leyen, and with the Executive Vice President, Valdis Dombrovskis, and with the Commissioner for Economics Paolo Gentiloni. Then, Yellen attended the Eurogroup meeting – in its 27-nation format – to chat with EU finance ministers. Not all EU partners agreed on the global minimum tax that Joe Biden was able to solve. Ireland, whose finances are led by Eurogroup chief Pascal Donohue, refuses to accept this deal. Hungary and Estonia also refuse to join the agreement. “We hope that all EU member states will adhere unanimously,” Yellen said at the Eurogroup meeting. “We need sustainable sources of income that do not depend on increasing workers’ wage taxes and exacerbating economic disparities that we are all committed to reducing,” he added.
Community sources stress that Brussels is not ignoring the digital tax. However, they admit that they need more time to convince the US that the rate is non-discriminatory, as it affects both US and European companies. However, there is no consensus on this tax in the European Union either, since countries such as Luxembourg, Ireland or Sweden have repeatedly rejected this tax. German Vice-Chancellor and Head of Finance Olaf Scholz stressed that Brussels’ decision to suspend the discussion is a “sign” of progress being made to close an agreement on a minimum tax next October.
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Although some hawks Like Austria, they began waving the flag of austerity, Yellen asked ministers to do the opposite. Yellen stressed that the EU’s fiscal response to the recession caused by the COVID-19 pandemic was “decisive” and “unprecedented”, as well as by the European Central Bank (ECB), which managed to contain interest on sovereign debt. However, he thinks we should go further. “In the United States, we are committed to implementing additional fiscal measures in addition to the $1.9 trillion rescue package,” the Treasury Secretary explained to EU finance ministers.
I think we can all agree that uncertainty remains high. In this context, it is important that the fiscal position remain supportive until 2022. Looking ahead, it is important that member states seriously consider additional fiscal measures to ensure a strong national and global recovery,” added Treasury Secretary Yellen, who reaffirmed their commitment to a strong relationship “stronger” transatlantic, not neglecting caution. “Long-term financial sustainability is of vital importance.” And their formula for achieving this is that multinational corporations pay a tax of at least 15% of their profits wherever they do business.
“We need to put an end to companies’ diversion of capital income to low-tax jurisdictions and accounting tricks that allow them to avoid paying their fair share,” Yellen added. “We need to make sure that the globalized economy does not continue. It defrauds our middle classes so that they remain open and free, promoting economic growth and business certainty.”