Negotiations over a global tax deal are continuing past the June 30 deadline, with governments now looking to the Group of 20 finance leaders meeting this week for progress on the stalled plan to reallocate taxing rights on large multinational companies.
The “Pillar 1” arrangement, part of a 2021 global two-part tax deal, aims to replace unilateral digital services taxes (DSTs) on U.S. tech giants like Alphabet’s Google (GOOGL.O), Amazon.com (AMZN.O), and Apple (AAPL.O) with a new mechanism to share taxing rights among more global companies.
The stakes in these negotiations are high. If an agreement isn’t reached, several countries might reinstate their taxes on U.S. tech giants, risking duties on billions of dollars in exports to the U.S.
Standstill agreements, under which Washington has suspended threatened trade retaliation against Austria, Britain, France, India, Italy, Spain, and Turkey, expired on June 30. However, the U.S. has not yet imposed tariffs.
Discussions are ongoing. An Italian government source said European countries are seeking assurances that U.S. tariffs on about $2 billion worth of imports, from French Champagne to Italian handbags and optical lenses, remain frozen while talks continue, including at the G20 meeting in Rio de Janeiro.
A European Union document for the G20 meeting lists finalizing the international tax deal as a priority. It says the G20 should urge participating countries to finalize discussions on all aspects of Pillar 1, aiming to sign the Multilateral Convention (MLC) by the end of summer and ratify it as soon as possible.
Meanwhile, Canada became the eighth country in July to impose a unilateral digital services tax. Finance Minister Chrystia Freeland said it was “simply not reasonable, not fair for Canada to indefinitely put our own measures on hold” after the June 30 deadline passed without a Pillar 1 agreement.
