Digital Tax Talks In G20 Spotlight As US Tariff Threat Looms

Negotiations on a global tax deal have extended beyond the June 30 deadline, with countries now looking to the G20 finance leaders meeting for progress. "The stakes in the negotiations are high," reports Reuters. "A failure to reach agreement on final terms could prompt several countries to reinstate their taxes on U.S. tech giants and risk punitive duties on billions of dollars in exports to the U.S." Some countries, like Canada, have already implemented their own digital services tax. Reuters reports: The so-called "Pillar 1" arrangement, part of a 2021 global two-part tax deal, aims to replace unilateral digital services taxes (DSTs) on U.S. tech giants including Alphabet's Google, Amazon.com and Apple through a new mechanism to share taxing rights on a broader, global group of companies. Standstill agreements under which Washington has suspended threatened trade retaliation against seven countries -- Austria, Britain, France, India, Italy, Spain and Turkey -- expired on June 30, but the U.S. has not taken steps to impose tariffs. Discussions on the matter are continuing. An Italian government source said that European countries were seeking assurances that the U.S. tariffs on some $2 billion worth of annual imports from French Champagne to Italian handbags and optical lenses remained frozen while the talks continue, including at the G20 meeting in Rio de Janeiro. A European Union document prepared for the G20 meeting lists finalizing the international tax deal as a "top priority." It said the G20 should urge countries and jurisdictions participating in the tax deal "to finalize discussions on all aspects of Pillar 1, with a view to signing the Multilateral Convention (MLC) by summer end and ratifying it as soon as possible." "Treasury continues to oppose all tax measures that discriminate against U.S. businesses," a U.S. Treasury spokesperson said in response to Canada's move. "We encourage all countries to finalize the work on the Pillar 1 agreement. We are in active discussions on next steps related to the existing DST joint statements."

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