EU holds fire on tech tax proposal

Plans for the introduction of a tax on tech giants across the European Union have been put on hold as international efforts to agree on a global minimum corporate tax rate progress.

Over the weekend, finance ministers from the G20 countries agreed to back proposals initiated by the United States government for a minimum tax rate of 15 percent, which has previously been backed by G7 leaders last month and also more than 130 countries that are members of the Organization for Economic Cooperation and Development, or OECD. G20 leaders will have a chance to discuss the proposal in October.

As a result of this international progress, European Commission spokesman Daniel Ferrie said the EU's plans for its digital levy were "on hold".

"I think we will work together to reach this global agreement," said Paolo Gentiloni, European Commissioner for economy, to reporters after a meeting with US Treasury Secretary Janet Yellen, who is visiting Brussels.

Yellen has called on all EU member states to back the plan, which aims to make companies, particularly in the tech sector, pay their taxes where they are based.

"We need to put an end to corporations shifting capital income to low-tax jurisdictions, and to accounting gimmicks that allow them to avoid paying their fair share," she was quoted by Reuters as saying.

However, some countries such as Estonia, Hungary and Ireland, where the corporate tax rate is 12.5 percent, have benefited from this arrangement, and oppose the new plans as they would be likely to lose business and income as a result.

"We've taken about 10 billion euros ($11.84 billion) a year in corporation profit tax, double what the average European country does per head," Ireland's Deputy Prime Minister Leo Varadkar was quoted by BBC as saying.

He said the change was about "big countries trying to get a bigger share of the pie".

After a meeting with Yellen, a spokesperson for Ireland's Finance Minister Paschal Donohoe said he had told her that his country supported change to how multinational corporations are taxed, but that it stood by its opposition of the 15 percent minimum rate.