London- In this year, Silicon Valley tech firms look increasingly likely to face new global tax laws, due to a change in the White House fuels optimism among European officials that an agreement will soon be reached.
On Thursday, German Finance Minister Olaf Scholz said it is now “highly likely” that a deal on tax will be struck before a summer deadline at the OECD level.
Just one day after speaking to new U.S. Treasury Secretary Janet Yellen Via telephone, He said, “I’m really confident that we’ll get an agreement.”
Yellen backed calls for a new global levy on tech giants during a Senate confirmation hearing last week. She’s also pledged that the U.S. will actively participate in the negotiations with other OECD nations after the previous administration decided to pull out of the talks in the summer of 2020.
After failing to reach a deal in 2020, the OECD trying to have an international agreement on how to tax tech giants by the summer. In spite of the lack of consensus at the OECD level, some European countries have applied their own digital taxes, involving Spain, Italy, and France. Moreover, the latter was the first country to demand payment for the digital giants, on the other hand, nations have put the taxes on the hold while waiting for the outcome of the OECD talks.
However, if the OECD talks fail again, the European Commission, the executive arm of the EU expected to announce an EU-wide digital tax. Further, this levy would have approved unanimously by all 27 EU nations, which has proven challenging in the past.
Differences on how to tax these companies had been the reason for a transatlantic difference during the presidency of Donald Trump, who threatened to impose tariffs on German carmakers on different occasions.
On Thursday Scholz said, “It is highly likely that we will get the success we are working for so hard.” He also added, “And the new administration gave me the impression that they understand the need for an agreement in this field and that they will work on solutions together with all of us, which I think is a big, big success. And anyone knows that the timetable is very strict, we have to agree in summer,”
The German minister praised his new U.S. counterpart more broadly after their conversation Wednesday. He conveyed that the “pragmatic approach” in the U.S.- European relationship appeared to be returning, adding that there was a “good chance for a new transatlantic partnership.”
French Finance Minister Bruno Le Maire has also welcomed the support of President Joe Biden’s administration over the proposed global tax. Speaking at a Davos Agenda panel on Monday he said he believed a multilateral agreement could come into force as soon as this spring.
“I think it is very good news that the new Secretary for the Treasury Janet Yellen just explained that she was open about the idea of thinking about a new international taxation with the two pillars: First of all, digital taxation and, of course, also a minimum taxation on corporate tax.”
“I think we are on the right track. There is a possibility of finding an agreement on this new international taxation system by the end of this spring 2021. And I can tell you that we will do our utmost efforts to pave the way for an agreement,” Le Maire told the news reporter.