Monday, 24 February, 2020

United Kingdom says to proceed with digital tax despite U.S. threat

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Cecil Little | 23 January, 2020, 00:29

UK Chancellor Sajid Javid confirmed that the country will introduce a digital sales tax in April.

Le Maire said he is prepared to delay collections of the tax due in April and November until the end of the year, so long as the USA refrains from imposing new tariffs. He hinted retaliatory tariffs could be imposed on the UK's auto industry if the tax goes ahead.

France is also planning a digital tax and in response, Trump has threatened tariffs on French goods including wine.

Mnuchin said at the World Economic Forum in Davos that he found the latest projections of the International Monetary Fund (IMF) - which trimmed its forecast for U.S. growth to 2.0 per cent this year and to 1.7 per cent in 2021 - to be overly pessimistic.

Javid described Britain's tax, seen as targeting especially United States giants such as Amazon, Google and Facebook, as "proportionate" and "temporary".

"It is a tax that was deliberately designed as a temporary tax".


'With more traditional businesses, countries came together with treaties on corporation tax and other profits taxes and this also requires an worldwide solution.

The Organisation for Economic Cooperation and Development (OECD), which is overseeing efforts to find a joint solution, has also urged national governments to wait for a multilateral agreement.

Asked whether a US-UK trade deal will be possible if Mr Javid presses ahead with the tax, Mr Mnuchin said "we will be having some private conversations about that", adding: "I'm sure this will be worked out".

Mr. Mnuchin appeared with Mr. Javid in a panel in the Swiss ski area and said: "I'm sure the President and Boris will talk about it as well as the President with Macron".

Mnuchin emphasised the United States was still involved in the OECD dialogue, but insisted that a digital tax was "discriminatory in nature".

'If people want to just arbitrarily put taxes on our digital companies, we will consider arbitrarily putting taxes on vehicle companies, ' he warned.


Gurria added that in the absence of a globally agreed tax, there would be a "cacophony and a mess" with "tensions rising all over the place".

Speaking ahead of a meeting with European finance ministers in Brussels on Tuesday, Mr Javid said: "We have been very clear that as we leave the EU, we will not be in the single market, we will not be in the customs union".

"The President has said If we get all of Phase Two done, he will remove the tariffs", Mnuchin said during a panel at Davos. "The solution is an global agreement and Britain is at the forefront of discussions to achieve one", he said.

He added: "We're very much looking forward to a new trade agreement with the United Kingdom - that's a big priority of ours for this year".

The U.S. and China concluded a major trade deal this month after months of sometimes bitter negotiations, but Mnuchin said that the next round of talks could easily be broken into smaller parts, yielding several deals.


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