The US government has withdrawn from international negotiations on new tax rules designed to improve tax collection from multinational internet companies. The Financial Times reports that the US treasury secretary Steven Mnuchin sent a letter to his counterparts in four European countries involved in the talks, informing them of the US decision to withdraw from the OECD-led negotiations.
Mnuchin said the talks had reached an "impasse" and the US was unable to agree on changes even on an interim basis, according to the letter sent to the UK, France, Italy and Spain and seen by the FT. The OECD had hoped to reach an agreement by the end of this year. Mnuchin said the talks should not be rushed while most countries are focused on handling the coronavirus pandemic.
The secretary also repeated the US opposition to digital service taxes, something being implemented in all four countries addressed. The US has called the measures unfair, as they particularly impact the big internet companies based in the US. Last month the US trade representative started looking at possible retaliatory measures against countries imposing such levies.
The OECD negotiations focus on two measures. The first would allow countries to impose a form of income tax on sales of some companies without a physical presence in the country. The second would set a minimum corporate tax rate, in an attempt to prevent a 'race to the bottom' among countries trying to attract corporate headquarters and the related tax revenue.
Mnuchin said the US hopes to resume talks on the matter later this year and agree on the second measure before year-end. According to the FT, European countries are unlikely to accept one measure without the other. They will write a joint response to US secretary shortly.
