Read on Twitter
This is bad news. Without the US's participation in global tax reform, I only see three ways forward, all bad: https://www.ft.com/content/1ac26225-c5dc-48fa-84bd-b61e1f4a3d94
1. Proceed anyway with the OECD project, and apply the new rules to US-headquartered corporations.
That would break countries' tax treaties with the US, which most countries won't be willing to do (and some countries, and the EU itself, can't legally do).
That would break countries' tax treaties with the US, which most countries won't be willing to do (and some countries, and the EU itself, can't legally do).
2. Proceed anyway, but accept the new rules don't apply to the US.
But, given the significance of US-headquartered multinationals that would render the rules toothless. Worse still, it would give a competitive advantage to US MNEs vs EU and other MNEs.
But, given the significance of US-headquartered multinationals that would render the rules toothless. Worse still, it would give a competitive advantage to US MNEs vs EU and other MNEs.
3. The process falls apart, and we see a plethora of unilateral digital services taxes, turnover taxes etc.
The only real thing these taxes have going for them is that they don't need the US's consent - they are outside the scope of tax treaties. Otherwise an unprincipled mess
The only real thing these taxes have going for them is that they don't need the US's consent - they are outside the scope of tax treaties. Otherwise an unprincipled mess
And US retaliation, through tariffs or tax countermeasures, is a real possibility - e.g. https://taxfoundation.org/us-trade-representative-ustr-digital-services-tax-investigations/
I'm struggling to see any happy scenario here. My recommended strategy is basically:
