US pulls out of global digital tax negotiation

US pulls out of global digital tax negotiation

The United States has pulled out of international digital tax negotiation with the European countries. 

The decision was disclosed in a letter from Steven Mnuchin, the Treasury Secretary to France's finance minister Bruno Le Maire who in turn sent the letter to the British, Italian and Spanish finance ministers.

In the letter it was said that the US has reached an impasse and there is no room for interim deal.

Robert Lighthizer the United States trade representative confirmed on Wednesday that the country was pulling out of the negotiation.

He added that the US is ready to take retaliatory measures if the countries go ahead with the plan.

“The secretary made the decision that rather than have them go off on their own he would just say we’re no longer involved in the negotiations,” he said referring to Treasury Secretary, Steven Mnuchin. 

European countries are proposing taxing tech giants which would affect largely American companies like Facebook, Google, and Amazon.

The US and European Union have been on the talks since last years but there doesn’t seem to find a common ground. 

For instance, last year, when it was difficult for EU to implement the digital tax across Europe, it sought an international approach by taking the issue to the Organization of Economic Cooperation and Development. 

While the OECD is yet to decide the right negotiation route, France implemented a digital levy which sparked tension between the United States France. 

Robert Lighthizer said the tax levied on American countries was unfair threatening that the US would, in retaliation impose tariff on some French goods like handbags, cookware, and wines
However, since January the proposed tariff has been suspended as both countries reached an agreement to continue with discussion over the tax at the OECD.

With the OECD gearing up to present a proposal later this year, the U.K., Italy and Spain have already drawn a proposal on the digital tax in case OECD talk fails.

Meanwhile the US has said early of this month that it would look into the implementation of taxes on American digital giants by countries such as the United Kingdom , European Union, Italy, Spain, Austria, Brazil, the Czech Republic, the, India, Indonesia, and Turkey.

Speaking about the move by the US to withdraw from the deal, Lighthizer said he is in complete support of the US decision because those countries want to screw America with their proposal to impose taxes on Americans tech corporations.

“The reality was, they all came together and agreed that they’d screw America, and that’s just not something that we’re ever going to be a part of. I don’t want tax systems that unfairly treat American companies,” said Lighthizer.