EU urges U.S. to return to negotiations at OECD on digital taxes

WASHINGTON (Reuters) - The European Union on Friday urged the United States to return to negotiations about digital taxation at the Organization for Economic Cooperation and Development, but said it stood ready to make a new proposal at the EU level if those talks failed.

A spokesman for the European Commission’s delegation in Washington said the EU viewed fair taxation of the digital economy as a top priority and all businesses should pay their fair share of taxes.

“We remain committed to ensuring that all businesses, including digital ones, pay their fair share of tax where it is rightfully due,” the EU spokesman said.

Washington has been at odds with France and other countries over their plans to impose digital service taxes as a way to raise revenue from the local operations of big tech companies such as Alphabet Inc’s Google and Facebook Inc.

Critics say the firms profit enormously from local markets while making only limited contributions to public coffers.

U.S. Trade Representative Robert Lighthizer on Thursday said the Trump administration would announce steps against France over its digital services tax but delay action while France defers tax collections from U.S. technology firms.

Industry sources say they expect Washington to announce around $500 million in tariffs against French imported goods, following a U.S. Section 301 probe into France’s digital tax that Washington said showed discrimination against U.S. firms.

It has initiated similar investigations of digital services taxes adopted or being considered by 10 other countries, including Britain, India and Turkey.

Washington last month suggested a pause in OECD talks to reach a global solution on digital services taxation, citing a lack of progress in the negotiations, but a source brief on the issue said discussions were still continuing.

The issue could also come up when G20 finance ministers meet virtually on July 18.

The EU official gave no details on the possible EU proposal.

Reporting by Andrea Shalal; Editing by Dan Grebler and David Gregorio