Governments around the world are increasingly wishing to implement digital service taxes on US tech companies like Google, Amazon, and eBay. This is mainly because these companies have influenced competition in local markets. For instance, after Amazon entered the Turkish market, the local Turkish retailers have lost a significant portion of their market shares to Amazon. Moreover, even though many American companies are making profits in foreign countries, they are paying only US taxes. This has led to heavy criticisms, prompting countries like France, Italy, Austria, Spain, and Britain to impose digital services taxes. But the US did not sit back and has also threatened to apply tariffs on imports from these countries.

To remedy this, the Organization for Economic Co-operation and Development (OECD) has been holding talks with 130 countries in order to create a proposal that would require multinational companies to pay a part of their income taxes where their customers are located. While the initial deadline for the OECD talks was December 2020, this date has been extended to 2021. Previously, the US withdrew from international talks on taxing large tech companies and has even been accused by France of trying to provoke the European Union (EU). However, the Biden administration has finally offered new proposals on taxing multinational corporations, which ask large multinational businesses to pay taxes based on their sales in each nation, calling for a global minimum corporate tax.

So far, Germany has been welcoming of this proposal, with the German finance ministry saying, “the constructive attitude of the new US administration is a decisive step which will make it much easier to reach agreement on how to tax the digital economy. The German government is confident that an agreement on this can be reached by the middle of 2021.” Pascal Saint-Amans, the head of tax administration at the OECD, has also shown appreciation of the US’s commitment, stating, “this reboots the negotiations and is very positive… It is a serious proposal with a chance to succeed in both the [international negotiations] and US Congress. Peace is more important than anything else and this would stabilize the [international corporate tax] system in the post-coronavirus environment.”

However, Robert Atkinson, the president of the Information Technology and Innovation Foundation, believes otherwise and has declared that the proposal “would not only be discriminatory, as it selects certain firms for higher taxes, [but] it would be against US interests, as presumably much of the increased tax would be imposed on US technology companies doing business in other nations.”

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