Regulation

US Treasury: Taxes On Digital Companies Are Discriminatory

A U.S. Treasury official said a French tax plan targeting American digital companies is discriminatory against American businesses.

Reuters reported that Chip Harter, the U.S. Treasury’s top international tax official, called the taxes “ill-conceived,” and said the better option was to go after tax reform internationally at the Organisation for Economic Co-operation and Development (OECD).

After a European Union plan for tax reform fell apart, France, along with Britain, Italy and Spain, are moving forward with plans to tax companies like Google and Apple. Australia is planning a similar tax plan as well.

“The challenges facing the international tax system are just far broader than how to tax social media and search engines,” Harter said.

Some countries find it unfair that digital companies can make profits in countries with the lowest taxes, regardless of the location of the customer.

“The United States opposes any digital services tax proposals, whether they be French or U.K.,” Harter said. “What we have seen of the most recent French proposals, we view them as highly discriminatory against U.S. businesses … Various parts of our government are studying whether that discriminatory impact would give us rights under trade agreements, WTO, treaties.”

Although he said he preferred a bigger international deal, French Finance Minister Bruno Le Maire said he plans to introduce the bill for the tax next month. “The best is to reach a consensus at the OECD, because once there is an international tax, France will withdraw its tax at the national level,” he said.

Progress on international tax law is a hotly debated topic, but hasn’t moved quickly. About 127 countries and territories came to an agreement at the beginning of the year that if revisions were made to global tax rules, they should divvy up the right to tax online companies’ cross-border income.

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