Janet Yellen, the US Secretary of the Treasury, on Friday February 26 at a G20 meeting lifted an American objection which allows the resumption, within the Organization for Economic Cooperation and Development (OECD), of negotiations on the taxation of digital giants and multinationals.
The talks were de facto suspended at the end of 2019, when Donald Trump’s Treasury Secretary Steve Mnuchin asked that American companies be able to have the choice not to participate in this global tax mechanism. Mr. Mnuchin’s official intention was to bypass the reluctance of the United States Congress – he must ratify any changes in US taxation. And the more the number of companies subject to this potential taxation increased, the more their lobbying reduced the chances of ratification.
The negotiations began in 2013, when the Europeans, in particular France, asked for a share of the tax revenues of the digital giants. Wealth is created in the United States, which prevents Europe, the place of consumption of digital services, from having its share of the pie. At the time, they encountered an end of inadmissibility from Democrat Barack Obama, close to the giants of Silicon Valley and financed by them.
Things are starting to move under Trump and the file is entrusted to the OECD in 2018. American elected officials, Democrats and Republicans alike have three wishes: a comprehensive agreement within the OECD, as was the case in the fight against tax havens; no unilateral measures, like those of France considered protectionist; finally, taxation that is not reduced to digital players.
Make the famous GAFA pay
At the time, the Europeans, starting with the French, wanted to charge Google, Apple, Facebook and Amazon, the famous GAFA, but they had to accept the American demand for a broader taxation: this would also hit businesses selling products directly to the consumer (often American), such as French Vuittons and German Mercedes. This is the proposal made by the OECD in the fall of 2019, until everything stops on January 5 when the Trump administration requests an exemption.
The case is blocked and Washington decides in July 2020 to take sanctions against France – Paris has decided to collect its GAFA tax – but ultimately decides not to impose them in early January 2021.
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