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Law360 (April 27, 2020, 1:24 PM EDT) -- The European Commission "strongly believes" that a global deal on digital taxes is preferable to countries' acting on their own, its tax commissioner has reiterated in a letter.
Paolo Gentiloni, the European Union's tax commissioner, said the European Commission still hopes that negotiations on a global digital tax and other measures will lead to an agreement this year. (AP)
Gentiloni said in the letter that hopes are that negotiations under the leadership of the Organization for Economic Cooperation and Development will find the outline for an agreement by early July and that further discussions will then lead to an agreement this year.
"The commission strongly believes that the best solution is a global one and is actively engaged in the work done in the OECD," Gentiloni said.
He added that the commission, the European Union's executive arm, would have to ensure that any such global agreement could be enacted in line with EU law. He also said, without offering details, that if there were no global agreement, the commission had said there would need to be some sort of new tax arrangement at the EU level.
Speaking Monday evening at a meeting of the European Parliament's Economics and Monetary Affairs committee, Gentiloni said that if there was no global deal on digital taxation and a minimum tax, then the EU would make proposals next year on those issues, which would be "extremely important in the years to come" as Europe recovers from the novel coronavirus pandemic.
Gentiloni's letter made no reference to COVID-19, the disease caused by the virus, which has led to millions of people globally being forced to live with largely unprecedented restrictions on movement.
The OECD is still aiming for a deal on tax reform that would involve a reallocation of taxing rights and a minimum tax to be reached by the end of the year, despite calls from business groups that the pandemic should lead to a delay of the process.
The commission didn't have an immediate response to a request for comment.
Gentiloni's letter was in response to a one-line question dated Feb. 25 from Martin Schirdewan, a German member of the Left bloc in the European Parliament. He wanted to know if the commission had a "specific timeline" to present its digital taxation initiative.
Schirdewan didn't have an immediate response to a request for comment.
The OECD's effort has grown out of a push in Europe for large technology companies to pay more in tax. Two years ago, the commission proposed a digital services tax for the entire EU that would have hit the world's largest tech companies on revenue earned on items such as digital advertising and sales of data. The effort failed because EU countries did not reach a unanimous agreement on the proposal.
--Editing by Robert Rudinger.
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