Biden paves the way to a universal 'Google rate'

The US Treasury Secretary, Janet Yellen, told the rest of the G20 Economy and Finance ministers last night that her country renounces the so-called Safe Harbor, which was one of the main obstacles to the creation of a tax on large digital companies.

Yellen told his international colleagues that President Joe Biden’s Administration does not plan to go ahead with the plans of his predecessor, Donald Trump, and renounces the tax shelter, according to the newspaper. The Wall Street Journal.

This measure promoted by the Trump administration should allow digital services companies to choose between the new tax that they should pay in the countries where they offer their services if the digital rate or the current system, by which they are subject to
the taxation of the jurisdiction in which they have decided to establish their registered office.

Large technology companies such as Google, Facebook and Apple very often use this option to locate their headquarters in countries with a low tax burden and thus pay less than they would elsewhere.

The negotiation for the digital rate that is carried out within the framework of the Organization for Economic Cooperation and Development (OECD) has been blocked by the United States for months, since the Trump Administration had imposed a veto on a device that it estimated that it was against their companies. An agreement in this sense would allow a fair redistribution between countries of an annual tax collection of between 60,000 and 100,000 million dollars (between 50,000 and 83,000 million euros).

Given the realization of this blockade, last October it had been agreed to renounce the goal of reaching a commitment by the end of 2020 and it had been postponed to mid-2021, with an eye on a change of government in Washington.

After the G20 meeting, the French Minister of Economy and Finance, Bruno Le Maire, said he was “happy” for the new position of the US Government and was convinced that now the digital rate is “within reach”.

The European Commission’s director for direct taxation and tax coordination, Benjamin Angel, also welcomed the change in position, calling Yellen’s words on Twitter “an important step to abandon the tax shelter requirement.”

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