BRUSSELS — Global tech trade association ITI urged the European Commission to set aside its development of an EU-level digital levy and to re-commit to finding a multilateral, consensus-based solution to the tax challenges related to the digitalisation of the global economy in the negotiations taking place at the OECD/G20 Inclusive Framework.
ITI’s comments, made in response to the European Commission’s second public consultation on its proposed digital levy, emphasized the importance of the European Commission maintaining full commitment to the ongoing multilateral discussions in order to avoid undermining the significant progress that participating governments and the OECD have made.
“There is an inherent disconnect between demonstrating genuine support for reaching agreement in multilateral negotiations and at the same time advancing a unilateral measure that ultimately detracts from ongoing OECD/G20 Inclusive Framework efforts to address the tax challenges arising from the digitalisation of the global economy. ITI and others – including Pascal Saint-Amans, Director for the OECD’s Centre for Tax Policy and Administration, in recent comments to the European Parliament Committee on Budgets – have encouraged the European Union to set aside its plans for its own tax measure, especially given the multilateral project’s stated intent for participating governments to withdraw unilateral measures.”
The European Commission has expressed its interest in introducing a digital levy to be implemented in addition to what participating governments will implement as part of any multilateral, consensus-based agreement reached by the OECD/G20 Inclusive Framework. The proliferation of unilateral measures has already contributed to the fragmentation of the global tax system, and an inability to reach consensus on a multilateral solution will only exacerbate that fragmentation and other negative consequences, such as the slowing of economic growth and the augmentation of diplomatic and trade tensions.
ITI and its members have consistently supported the negotiations at the OECD/G20 Inclusive Framework, including through the development of Principles for a Solution in the OECD’s Project for Addressing the Tax Challenges of the Digitalisation of the Economy in May 2020 and regular technical engagement in December 2020, December 2019 (Pillar Two), and November 2019 (Pillar One).