Big tech backs global tax, but wants taxes on digital services removed

The logos of Amazon, Apple, Facebook and Google in a combined photo.

U.S. tech giants could benefit from the Group of Seven Rich Country’s agreement to create a minimum 15% overall corporate tax rate if the final deal also removes increasingly popular taxes on services digital, according to industry lobbyists.

The deal, struck on Saturday, sought to reduce incentives for companies to shift profits to low-tax offshore havens and could bring hundreds of billions of dollars into government coffers.

The statement posted on the US Treasury Department’s website touting the deal also addresses “the elimination of all digital services taxes, and other relevant similar measures, on all businesses.”

Facebook Inc (FB.O) was quick to praise the deal, and Alphabet Inc’s Google (GOOGL.O) followed suit: “We strongly support the work being done to update international tax rules. We hope that the countries will continue to work together to ensure a balanced and lasting agreement will soon be finalized, ”said spokesman José Castaneda.

The industry wants levies like the French 3% tax on certain online income to be abolished. In 2019, France applied a 3% levy on revenues from digital services made in France by companies with revenues exceeding 25 million euros there and 750 million euros worldwide. It suspended collection in early 2020 while negotiations were underway on international tax rules.

Taxed on revenue rather than profits, taxes have become an increasingly popular way for countries to balance their budgets, said Matthew Schruers, president of the Computer and Communications Industry Association. CCIA members include Facebook, Google and Twitter.

He noted that the weekend statement called for taxes on digital services to be repealed. “Business is supporting these global tax negotiations and minimum tax is the price of tax security.”

Adam Kovacevich of the House of Progress, whose partner companies include Inc (AMZN.O), Facebook and Twitter Inc (TWTR.N), agreed, saying large companies had been targeted in the five to 10 years by “discriminatory taxes on digital services” and wanted a different system of corporate taxation.

NetChoice, which also counts Facebook and Google among its members, had a different point of view.

“More taxes mean higher costs for consumers and less spending on R&D, as the administration and Congress demand more R&D to compete with China,” President Steve DelBianco said in a statement.

DelBianco was not impressed with the possibility of the deal removing taxes on digital services. “This 15% tax is a floor, not a ceiling, and it is unlikely to stop European governments from passing new digital taxes and taking antitrust action to hurt American businesses.”

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