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Mnuchin raises concerns over global talks on taxing digital economy

Treasury Secretary Steven MnuchinSteven Terner MnuchinTrump opens new front in trade war in surprise move The Hill’s Morning Report – Impeachment of Trump resumes China wants removal of US tariffs in first phase of trade deal: report MORE is raising concerns about ideas that are being considered  in international discussions over how to address the tax challenges of the digital economy.

Mnuchin said in a letter Tuesday to the Organization for Economic Cooperation and Development (OECD), the group holding the discussions about international tax rules, that the U.S. has “serious concerns” about potential mandatory departures from “longstanding pillars of the international tax system upon which U.S. taxpayers rely.”

The letter comes after the U.S. Trade Representative (USTR) on Monday found that France’s digital services tax is discriminatory and proposed tariffs of up to 100 percent on $2.4 billion in French products. The USTR also said that it’s also considering opening investigations into digital services taxes in other countries.

U.S. policymakers and tech companies have criticized countries interested in country-specific digital services taxes, arguing that they unfairly target American tech businesses. They have instead been hoping that the OECD can reach an agreement on international tax rules. The OECD is hoping to come out with an agreement by the end of next year, in order to prevent more countries from acting unilaterally.

In his letter, Mnuchin said that the U.S. “firmly opposes” digital services taxes, arguing that they’re inconsistent with the principles in current international tax rules. He urged “all countries to suspend digital services tax initiatives, in order to allow the OECD to successfully reach a multilateral agreement.” 

Mnuchin said that the U.S. supports the discussions at the OCED, and that the U.S. believes “there is broad support for greater certainty and administrability.” 

But he said he was worried about a mandatory break from longstanding standards about where taxes should be paid and on what basis. The OECD is looking at revising rules in this area as part of Pillar I of its efforts. 

“Nonetheless, we believe that taxpayer concerns could be addressed and the goals of Pillar I could be substantially achieved by making Pillar I a safe-harbor regime,” Mnuchin said.

Pillar II of the OECD’s project is focused on ensuring that multinational companies pay a minimum level of tax. Mnuchin said that the U.S. supports a solution for Pillar II that resembles a minimum tax on foreign earnings created by President TrumpDonald John TrumpTop Democrat: ‘Obstruction of justice’ is ‘too clear not to include’ in impeachment probe Former US intel official says Trump would often push back in briefings Schiff says investigators seeking to identify who Giuliani spoke to on unlisted ‘-1’ number MORE‘s tax law.

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