Treasury Secretary Janet Yellen said Friday that regulators have agreed to remove a controversial part of the U.S. government’s plan to reform global digital tax rules, paving the way for a faster deal.
What is happening: Yellen told G20 finance ministers that the United States would abandon a “safe harbor” provision the Trump administration had been fighting for, which would have essentially allowed tech companies to opt for any new tax regime, he said. FT.
Why it’s important: It indicates that Washington is willing to move forward on an international agreement on digital taxes, which the Trump administration failed to achieve.
Context: Countries around the world, including France, have tried to set digital taxes, which are usually targeted at American tech giants who make money with international users.
- The effort has also gained momentum in the United States: Maryland has just become the first state to enact a tax on digital advertising.
- The business and technology communities have been vigilant to see how the Biden administration would take on this problem. The process has progressed slowly and European countries have been eager to push their tariffs forward.
What they say: Technology companies want a global digital tax deal, arguing that they are happy to pay the tariff fee, but that it should be uniform.
- “As the global economy tries to recover from the global pandemic and governments face new fiscal pressures, an agreed solution is needed more than ever to ensure a lasting framework for cross-border trade and investment,” he said. Google’s Vice President of Public Affairs and Public Policy Karan Bhatia wrote in a blog post on Thursday.
What follows: Countries will continue to try to establish an agreement with the Organization for Economic Co-operation and Development, where negotiations are under way.