European Union (EU) officials are giving the Organization for Economic Cooperation and Development (OECD) until mid-2021 to achieve consensus on a global digital tax plan, but will go it alone if that target date is missed.
The OECD convened a two-day meeting last week to jumpstart discussions among 137 countries on a global tax overhaul to address how “consumer-facing” digital giants like Apple, Google, Facebook and Twitter are taxed in countries where they have users. OECD said Monday it needs more time. The OECD’s work has taken on some urgency as some countries have grown impatient and said they will come up with their own digital tax plans if international consensus is not reached by the end of 2020.
The new target date of mid-2021 “must be the final one,” said Daniel Ferrie, tax spokesperson for the EU. “We cannot keep on postponing.”
The OECD’s two-pillar plan would allocate some profits of multinationals to the countries where they have users or consumers, as well as create a global minimum tax rate. Under this second pillar, countries would be able to tax a company that isn’t paying at least a minimum rate in another country. Negotiators have not agreed on what a minimum rate would be.
Treasury Secretary Steven Mnuchin has not reengaged in the global tax discussions since June, but he has previously suggested making the first pillar a “safe harbor,” so that companies could choose for themselves whether to participate or not. Other countries have said a safe harbor for multinationals would undermine the plan’s objectives.