EU puts on hold plans for digital tax

The European Union (EU) has ‘put on hold’ plans for a digital tax on technology giants like Amazon, Facebook and Google. The decision reportedly follows pressure from the United States, which believes the EU's levy has been made redundant by a separate agreement to reform the global tax system. The EU-wide tax plan is part of a bid to boost financial resources and pay for the post-COVID-19 recovery.

First agreed to by the G7, the international agreement includes plans to redistribute taxing rights and set a global minimum tax rate of 15 per cent for corporations. It was given a further push recently when G20 finance ministers and central bank governors gave their nod.

"Successfully concluding this process will require a final effort, a final push by all parties, and the Commission is committed to focusing on that effort," a spokesperson for the European Commission said. "For this reason, we have decided to put on hold our work on a proposal for a digital levy."

The spokesperson, however, refused to say whether US lobbying played a part in its decision to pause its digital tax plans.

The EU executive plans to ‘reassess’ its proposal in October, which is when the G20 want the technical details finalised.