USA proposal to undermine global digital tax consensus project

The Organisation for Economic Co-operation and Development (OECD) is currently working for a broad consensus to design a digital tax system reflective of the digitisation of the economy. So, there is broad recognition that reaching a multilateral solution is the best way to address the tax challenges arising from the digitalisation of the economy.

However, a global digital tax agreement is unlikely if the US persists with its safe harbour proposal under which companies could elect how they wish to be taxed, EU Economic Commissioner Paolo Gentiloni warns.

The U.S. proposal “will in fact make a global solution very improbable”, Gentiloni told lawmakers in the European Parliament in Brussels.

In fact, the U.S.A has accepted the reform but has proposed to give multinational companies the option of being taxed under existing rules or the future arrangements which are under negotiation at the Organisation for Economic Cooperation and Development (OECD).