On Thursday, finance ministers and central bank governors of G7 nations met in France to decide over the issue of digital tax, proposed and imposed by France last week. ‘Digital tax’ is the tariff which European nations would levy on the big tech firms over their income earned inside a country even if their headquarters are location somewhere else.
After France announcing plans to levy 3% duty on the revenue earned by the digital companies, Britain, Germany and few other European nation followed the suit.
The US president Donald Trump criticised the tax as a discriminatory and unreasonable for it burdens US economy by targeting only US giant tech firms like Google, Apple, Facebook and Amazon. Trump even ordered to investigate the matter and threatened to impose heavy tariffs on goods imported from the nations who would impose it of it. It is suspected to initiate one more trade war, after US-China and US-EU tariff conflict, hampering the global economy.
France replied to US in a tough tone. French finance minister Bruno Le Maire told the Guardian in an interview, “We will never give up. We are implementing a digital tax on digital giants because we think it is a fair and efficient way of taxing them.”
At the summit, leaders of the seven nations discussed the issue and together came up with a two-way solution. Le Maire said that finance ministers and central bankers reached an agreement “to tax activities without physical presence, in particular digital activities.” He told reporters that it is the first time that G7 members agreed in principle over the issue. He added that all the ministers agreed to impose a minimum tax, which ‘would contribute to ensuring that companies pay their fair share of tax. The tax would come into execution by 2020.
US Treasury Secretary Steven Mnuchin said that the agreement, though passed by all the member nations, still need more work before its applied.