G20 finance officials eye solution to digital tax row this year

Credit: REUTERS/Dado Ruvic

Adds details from communique, French, German reaction

WASHINGTON/BERLIN July 18 (Reuters) - Finance officials from the Group of 20 major economies on Saturday vowed to resolve major differences over taxing big tech companies and reach a broad, consensus-based solution on international taxation this year.

The United States has been at loggerheads over the issue with Britain, France and other key allies, who have adopted or are considering digital service taxes as a way to raise revenue from the local operations of big tech companies.

Critics say those firms profit enormously from local markets while making only limited contributions to public coffers, but Washington contends the taxes discriminate against U.S. tech firms such as Google GOOG.O, Facebook FB.O and Apple Inc AAPL.O.

The Trump administration this month ratcheted up pressure on France over its 3% digital services tax, saying it would impose additional duties of 25% on French imports valued $1.3 billion but would hold off on implementing the move while talks continued in the Organisation for Economic Co-operation and Development.

G20 finance ministers and central bankers on Saturday acknowledged that the coronavirus pandemic had slowed work toward an international plan, but said they expected concrete proposals to emerge before their next meeting in October.

"We remain committed to ... overcome remaining differences and reaffirm our commitment to reach a global and consensus-based solution this year," they said after a virtual meeting.

After the meeting, German Finance Minister Olaf Scholz said, "Fair taxation of international companies and large digital groups is more urgent than ever."

French Finance Minister Bruno Le Maire said reaching an agreement by year end was "indispensible."

"The (pandemic) crisis proved that these digital giants were the big beneficiaries of the crisis. They must pay their fair portion of tax," he said.

(Reporting by Andrea Shalal in Washington, Christian Kraemer in Berlin, and Leigh Thomas in Paris; editing by Diane Craft and Cynthia Osterman)

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