July 1, 2020
By Leigh Thomas
PARIS (Reuters) – The United States remains committed to global talks on the taxation of big digital companies despite its call for a pause, the head of the Organisation for Economic Cooperation and Development (OECD) said on Wednesday.
U.S. Treasury Secretary Steven Mnuchin’s suggestion last month that a break was needed sparked European concerns about Washington’s commitment to a deal on the first major rewriting of cross-border tax rules in a generation.
Comments by U.S. Trade Representative Robert Lighthizer that Washington was “no longer involved in the negotiations” further fanned those doubts.
“To be clear, contrary to some earlier media reports, the U.S. has not pulled out of the negotiations,” OECD Angel Gurria said in a speech to delegates meeting online for the latest round of talks among nearly 140 countries.
“Indeed, the presence of the U.S. delegation here today, notwithstanding the U.S. request for a delay on pillar one, confirms their ongoing engagement in this important work.”
Pillar one refers to the talks to update international tax rules for the digital era, where big companies like Facebook <FB.O> and Alphabet’s Google <GOOGL.O> can legally book profits in low-tax countries regardless of where their end-clients are.
Those talks are running in parallel to a second pillar of negotiations to agree a global minimum level of corporate taxation, which are more advanced and – unlike the digital talks – have a fair chance of being wrapped up this year.
“Pillar two will ensure that a minimum level of tax will be paid, no matter how much clever tax planning is undertaken by multinationals,” Gurria said.
“This is why we need to reach an international agreement, whether partly in October and then later in 2021, or any other possible combination driven by the political agenda,” he added.
(Reporting by Leigh Thomas; Editing by Andrew Cawthorne)