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Digital tax. The US has reached an agreement with France, Italy, Spain and the UK

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The US has reached an agreement with France, Italy, Spain and the UK on a digital tax and will withdraw punitive duties on goods imported from these countries, introduced in connection with the taxation of internet giants, the US Treasury Department announced on Thursday.

The agreement is a consequence of the arrangements made within the Organization for Economic Co-operation and Development (OECD) – reads the ministry’s communiqué.

Tax agreement of 136 countries

The OECD recently reported 136 countries concluded an agreement on a digital tax, called GAFA (from the names of Google, Amazon, Facebook, Apple). The agreement provides for the taxation of GAFA and similar companies on the one hand, and the introduction of a minimum fiscal burden on the other to avoid tax optimization.

Last week, the G20 countries informed that the assumptions of this agreement will apply from the end of 2023 or from the beginning of 2024.

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Pending the entry into force of the new regulations, taxes introduced in individual countries will be credited to the future income of technology companies, the US Finance Ministry informed.

Digital tax dispute

The dispute over the taxation of American giants had dragged on for several years and was only resolved by negotiations and arrangements within the OECD. The US blocked the introduction of a tax on technology companies in countries associated with this organization.

In 2019, then-US President Donald Trump threatened to impose 100% tariffs on some French goods in connection with the introduction of GAFA in France. A tax was imposed on selected export goods, which was temporarily suspended in June by the administration of President Joe Biden.

Big profits, little taxes

The digital tax is supposed to seal the fiscal system, because tech companies, especially GAFA, which generate billions of dollars in profits from online activities, do not pay taxes in practice in many countries. They are allowed to do so by accounting measures that allow profits to be transferred where there are no or low taxes.

Some European countries, despite threats of retaliation from the US, decided to introduce the tax on their own before an agreement was reached.

The French government imposed a 3% GAFA tax in 2019 on companies with global revenues exceeding EUR 750 million per year and revenues in France above EUR 25 million per year.

The same threshold for the revenues of the taxed internet companies applies in Austria, where 5% of the tax is collected. tax. In Spain and Italy, the tax rate is 3%, it must be paid by companies whose revenues from digital activities in these countries exceeded EUR 3 million and EUR 5.5 million, respectively.

In Great Britain, a tax of 2 percent. Internet platforms are subject to which global revenues from online operations exceed 500 million pounds, and domestic revenues exceed 25 million pounds.

The tax is charged on revenues from digital activities such as online advertising, selling social media user data for advertising purposes, or online brokerage.

Main photo source: Shutterstock

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