Ongoing talks aim to finalise global tax deal

Negotiations for a global tax deal have extended beyond the 30 June deadline, with governments now looking to the Group of 20 (G20) finance leaders meeting this week for progress on the stalled plan. The ‘Pillar 1’ arrangement, part of the 2021 global two-part tax deal, aims to replace unilateral digital services taxes on tech giants like Google, Amazon, and Apple with a new mechanism to share taxing rights on a broader, global group of companies.

The stakes are high, as failure to reach an agreement could lead to several countries reinstating their taxes on the United States tech conglomerates, risking punitive duties on billions of dollars in exports to the US. Standstill agreements, under which Washington suspended threatened trade retaliation against seven countries, expired on 30 June. Despite this, the US has not yet imposed tariffs, and discussions are ongoing.

Canada recently became the eighth country to impose a unilateral digital services tax, emphasising the urgency for a global resolution. The US Treasury maintains that such taxes are discriminatory and continues to oppose measures targeting US businesses. The G20 meeting in Rio de Janeiro is seen as a critical juncture to finalise the international tax deal, with the European Union listing it as a top priority. As global leaders continue their discussions, there is a strong push to ensure a fair, risk-free, balanced tax system in the digital age.