Hey all, it’s Natalia. Tech giants including Alphabet Inc., Apple Inc. and Facebook Inc. could soon be hit with higher taxes around the world after global talks moved closer to an agreement.
Clashes between the European Union and Trump administration had hobbled progress over who outside of the U.S. gets to tax American tech companies, but President Joe Biden’s Treasury secretary pick, Janet Yellen, last week injected renewed optimism for a global deal.
After a call with Yellen, German Finance Minister Olaf Scholz said the Biden administration was showing a readiness to clinch an agreement. “I’m very confident we will be able to do it,” he said last Thursday. The Organization for Economic Cooperation and Development is brokering the discussions among nearly 140 countries and intends to settle them by the summer.
For years, Europe and the U.S. have chafed over where tech companies owe their taxes. In one legal case, the EU wants to overturn Apple’s victory in a 13 billion euro ($15.7 billion) tax dispute, arguing the iPhone maker owes that money to Ireland, not the U.S. A top EU court last July sided with Apple.
Europe wants to overhaul the traditional way of taxing internet companies by imposing levies on revenue, not profit. Officials want a slice of the value U.S.-based companies create in Europe through targeted advertising, the sale of data or other services.
Officials in Washington had pushed back on the efforts, arguing they unfairly target American companies. When global talks previously faltered, many countries in Europe pressed ahead with their own taxes anyway. France late last year started charging companies a 3% levy on digital revenue, prompting threats from the Trump administration to impose tariffs on $1.3 billion of French goods. The U.S. also called out Austria, Italy, Spain and the U.K., accusing them of discriminating against American companies with their tech tax plans.
The EU is moving forward on its own plans for a bloc-wide tech tax this summer, in the event the OECD effort doesn’t yield an agreement. Digital businesses are largely benefiting from the pandemic while many economies are under strain, and the EU wants its new tax to help fund recovery efforts.
Some executives have come around to the idea of a global deal, which could potentially cause less financial damage than a patchwork of different regulations. Facebook Chief Executive Officer Mark Zuckerberg last year said he supported the idea, even if it meant the company may have to pay more in taxes and to different jurisdictions.
Still, consumers and smaller businesses, not tech giants, could face the brunt of any new digital tax plans. Apple has already said it'll raise prices of software and in-app purchases to offset Turkey’s digital tax and adjust proceeds for developers in Britain, France and Italy.
Just how much is on the line for these companies will be made clearer on Tuesday, when Alphabet and Amazon.com Inc. report earnings for the holiday quarter.—Natalia Drozdiak
If you read one thing
The big winners of the Reddit-fueled stock rally grapple with an important question: Sell or “hold the line?” The returns could be life-changing, but abandoning the stock feels to some like a betrayal of the cause. “Hedge funds and the market movers are betting on us pulling out,” said one Reddit user.
And here’s what you need to know in global technology news
Elon Musk’s appearance on the app Clubhouse was all over the place. He talked about wiring a monkey’s brain to play video games, grilled Robinhood’s CEO about the ongoing trading controversy and declared his love of memes.
Google shut down its in-house game development arm. The move illustrates the difficulties big tech companies are experiencing when trying to break into the video game business. Meanwhile, Nintendo posted its best quarter since 2008.
Amazon is dialing up pressure on workers in Alabama to discourage them from unionizing. Employees were ordered to attend meetings where managers sowed doubts about the unionization push, said two people who attended.
Hackers who breached the U.S. federal court system using the SolarWinds exploit probably gained access to confidential information, including trade secrets and whistleblower reports, the Associated Press reported.
No comments:
Post a Comment