Facing criticism from the United States, the European Union shelved its digital taxation plan

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BRUSSELS (Associated Press)-Officials said on Monday that the European Union has temporarily shelved work on its digital taxation plan to focus on completing the historic tax decision approved by the G20 over the weekend.

In the face of criticism from the United States, the European Commission stated that its taxation of US technology companies will be shelved in order to cooperate smoothly on the political and technical obstacles that still need to be resolved in the G20 taxation. Make a decision before the end of October.

“To successfully complete this work requires the final effort and the final push of all parties. And the (EU) Commission is committed to focusing on this work,” said EU spokesperson Dan Ferry. “For this reason, we decided to shelve work on the proposal for digital taxation as a new EU resource during this period.”

Finance ministers from major G-20 economies have approved at least 15% of the world’s lowest corporate tax. The measure aims to set a lower limit on tax rates and prevent companies from using low-tax countries as tax havens.

The global minimum proposal faces political and technical obstacles before it goes into effect. The details will be finalized at the Paris Organisation for Economic Cooperation and Development in the coming weeks, followed by the final approval of the G20 Chairman and Prime Minister in Rome from October 30 to 31.

Then, countries need to incorporate tax rate legislation into their own laws. The idea is that if these incomes are exempt from taxes in low-tax countries, the headquarter country can tax the company’s overseas income domestically. This will eliminate the use of complex accounting plans to transfer profits to subsidiaries in low-tax countries, which may have little or no actual business.

In this context, the EU is also trying to focus on companies that make money in countries where there is no physical presence. This may be through digital advertising or online retail. Countries led by France have begun to impose unilateral “digital” taxes on the largest U.S. technology companies such as Google, Amazon, and Facebook.

The United States called these unfair trade practices and threatened to retaliate through import taxes.

The announcement by the European Commission comes as U.S. Treasury Secretary Janet Yellen is meeting with colleagues in the euro area and senior EU officials.

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