Finance

U.S. Treasury’s Yellen ‘pleased’ with delay to EU digital levy By Reuters

© Reuters. FILE PHOTO: U.S. Treasury Secretary Janet Yellen testifies before the Senate Appropriations Subcommittee on Financial Services about the FY22 Treasury budget request on Capitol Hill, in Washington, DC, U.S., June 23, 2021. Shawn Thew/Pool via REUTERS

BRUSSELS (Reuters) – U.S. Treasury Secretary Janet Yellen told Reuters on Tuesday she was pleased by the European Commission’s decision to delay its announcement of a proposed EU digital levy because it will allow work to be completed on a global corporate tax deal.

Speaking to Reuters after meeting with European Union officials in Brussels, Yellen said it was prudent for the Commission to wait for the final parameters of the OECD ‘Pillar 1’ deal to reallocate taxing rights for large multinationals before proceeding with its own levy.

“I was pleased with their decision to delay introduction of this,” Yellen said in an interview. “We’re in the middle of trying to finalize an agreement. Countries have agreed to repeal, with Pillar 1, existing measures, and to avoid introducing future digital taxes that would be discriminatory.”

On Monday, the European Commission confirmed that it would delay its digital levy, eliminating a potential barrier to the broader global tax deal. U.S. officials had said that the idea of a new digital levy, proposed last year when tax negotiations looked stalled, was inconsistent with the OECD deal.

Among other officials, Yellen met with Irish Finance Minister Paschal Donohoe, one of the major holdouts from the tax agreement and whose buy-in will be crucial for the EU to approve the deal for a 15%-plus global minimum corporate tax.

“He’s head of the Eurogroup of finance ministers, he invited me to meet with them. Clearly he has a strong interest in the success of the EU,” Yellen said.

She declined to comment on her message to Donohoe and Ireland’s latest views on the OECD deal.

The world’s 20 largest economies endorsed on Saturday a plan for a global overhaul of corporate tax that would introduce a minimum tax rate and change the way large companies like Amazon (NASDAQ:) and Google (NASDAQ:) are taxed, based partly on where they sell their products and services rather than on the location of their headquarters.

The reform, if finalised in October, would need parliamentary approval in the more than 130 countries that support it, including the U.S. Congress where it could face opposition from the Republicans. All EU member states must also approve tax reforms, including the envisioned global deal.

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