Thursday 18 June 2020 8:37 am

UK says it still wants deal on global digital tax after US quits talks

The UK will continue to push for a solution to taxing international digital companies such as Google and Facebook after the US abandoned negotiations for a global digital tax, the Treasury said.

US treasury secretary Steven Mnuchin pulled out of talks on digital services taxes with EU officials after they failed to make any progress, trade representative Robert Lighthizer said yesterday. 

Read more: US dashes hopes of global deal on digital tax

The UK and France have led the way with independent digital services tax proposals, and plan to implement them unless a global solution is found via the Organisation for Economic Cooperation and Development (OECD).

A Treasury spokesperson said: “We have always been clear that our preference is for a global solution to the tax challenges posed by digitalisation, and we’ll continue to work with our international partners to achieve that objective.”

Washington has been at odds with countries such as France and Britain over their plans to impose digital service taxes as a way to raise revenue from the local operations of big tech firms. 

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Critics say the companies profit enormously from local markets while making only limited contributions to the public purse, but Washington views the taxes as discriminating against US firms and has threatened to retaliate against countries that impose them.

France’s finance minister Bruno Le Maire this morning described Washinton’s decision to abandon talks a “provocation”, adding that France would impose a digital tax this year despite US objections. 

Read more: Budget 2020: Chancellor introduces digital services tax

Le Maire added that France, Britain, Italy and Spain had jointly responded on Thursday to Mnuchin’s letter announcing Washington’s decision to withdraw from negotiations on the planned taxes.

A spokesperson for the Treasury declined to comment on the UK’s response to the letter.

“This letter is a provocation. It’s a provocation towards all the partners at the OECD when we were centimetres away from a deal on the taxation of digital giants,” Le Maire said on France Inter radio.