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France-U.S. trade tensions pressure OECD to work quickly

The OECD is under tremendous pressure to find a solution to update international tax rules for the digital age after the United States announced possible tariffs in retaliation against France’s digital services tax.


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The OECD is under tremendous pressure to find a solution to update international tax rules for the digital age after the United States announced possible tariffs in retaliation against France’s digital services tax.

At the International Taxation Conference in Mumbai on December 5, Grace Perez-Navarro, deputy director of the OECD Centre for Tax Policy and Administration, highlighted the consequences of unilateral digital taxation measures, and the media and political pressure on the OECD to meet its aggressive timeline to complete its work on the taxation of the digital economy in 2020.

Following a section 301 investigation into the French DST, the Office of the U.S. Trade Representative announced it had found that France’s tax not only discriminates against U.S. digital companies but also violates international tax policy because it is a revenue-based tax. The office on December 2 announced plans to impose tariffs of over 100 percent on 63 types of French products, totaling over $2 billion.

Perez-Navarro warned that unilateral measures create international tax chaos and drive the need for multilateral consensus. She said the France-U.S. dispute has evolved from a tax war to a trade war, which isn’t beneficial for anyone. Such consequences undermine the free trade that countries have been advocating for. Therefore, it is essential to try to find a solution to this issue as soon as possible, she said.

Annet Wanyana Oguttu, a tax law professor at the University of Pretoria, urged caution about moving quickly, however, noting that there is a “disheartening concern” with the pace of these proposals for developing countries.

Oguttu emphasized that developing countries, such as those in Africa, need time after discussions to reflect on what is being suggested. Developing countries have issues with funding, she said, and because there are multiple discussions and meetings on these proposals every month, it is difficult to fully participate in properly implementing these changes. She said many countries believe the OECD needs to pump its brakes on their overall proposals because the international tax system is complex with high-level consequences.

By Kiarra M. STROCKO

Cet article est issu de notre service d'actualité Taxnotes.

© Editions Francis Lefebvre - La Quotidienne

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