DEBATE HEATS UP OVER HOW COUNTRIES TAX BIG TECH COMPANIES

An international debate over how countries tax big U.S. technology companies such as Google, Amazon and Facebook is heating up, presenting a challenge for President Joe Biden’s new administration.

A mid-year deadline is on the horizon for talks about a global deal to defuse trade disputes with France and other countries that are imposing go-it-alone digital taxes that the United States views as discriminatory.

France imposed a 3% tax on digital revenue for large tech companies, in effect singling out the U.S. tech giants. The French government has said it would withdraw the tax in favor of an international solution being negotiated under the auspices of the Organization for Economic Cooperation and Development, a Paris-based international organization of 37 advanced economies.

Experts and officials say time is getting short. Manal Corwin, a tax principal at professional services firm KPMG and a former Treasury Department official in the Obama administration, said digital taxes multiplying outside the OECD process “are threatening to trigger a trade war.”

U.S. trade officials have called unilateral digital taxes unfair and threatened trade retaliation against French goods, but have held off imposing sanctions.

Finance officials from more than 130 countries convened online to resume negotiations over how best to make sure multinational companies don’t avoid taxation by shifting their activities and profits among countries. One key question is how to appropriately tax companies such as tech firms that may have no on-the-ground presence in a country but nonetheless do substantial digital business there in the form of online advertising, the sale of user data, search engines, or social media platforms.