MNI POLICY:OECD Official:G20 Must Push e-Tax or Face Trade War

By Brooke Migdon

     WASHINGTON (MNI) - The OECD will work to advance digital tax guidelines at

a G20 meeting this weekend, a senior official told MNI Friday, warning an

impasse could stoke trade tensions.

     "No one wants to see the alternative," Grace Perez-Navarro, a deputy

director of tax policy, said Friday in an email. "A slew of unilateral,

uncoordinated digital services taxes and the trade war that would ensue."

     Leaders are convening in Saudi Arabia and one panel focused on tax and

digitalization is expected to include U.S. Treasury Secretary Steven Mnuchin and

French Finance Minister Bruno Le Maire. France shelved plans to collect a tax on

digital services earlier this year until a larger solution is reached at the

OECD. The U.S. has threatened to punish other nations like the U.K. if they tax

American tech giants.

     Perez-Navarro said "thorny issues" like copycat digital taxes and U.S.

demand for a "safe harbor" provision that would allow corporations to opt out of

proposed reforms make reaching consensus difficult.

     "We expect the G20 to continue to support the process and confirm their

commitment to reaching a solution by year end," Perez-Navarro said. "The whole

project is challenging but we must still reach consensus no later than

November."

     Then-Treasury chief Sajid Javid said last month that the U.K. would

continue to pursue a 2% tax on the annual revenue of large tech companies

despite U.S. threats of automobile tariffs. His new successor Rishi Sunak will

be absent from the G20. 

     Perez-Navarro said political pressure is forcing action in some countries,

which have been waiting on an OECD solution since the project to overhaul the

international tax system began in 2013. "For some, 'wait-and-see' is no longer

an option," she said.

--MNI Washington Bureau; +1 202 371 2121; email: brooke.migdon@marketnews.com

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