Discussions on a global tax deal are extending well past the June 30 deadline, with governments now focusing on a Group of 20 (G20) finance leaders meeting this week to advance the stalled plan for reallocating taxing rights on large multinational companies. The “Pillar 1” arrangement, part of a 2021 global tax agreement, seeks to replace unilateral digital services taxes imposed on major U.S. tech companies—such as Alphabet’s Google, Amazon, and Apple—with a new mechanism to distribute taxing rights more broadly across the global corporate landscape.
The stakes are high. Failure to finalize the agreement could lead several countries to reintroduce their taxes on U.S. tech giants, potentially prompting punitive duties on billions of dollars in U.S. exports.
Standstill agreements, under which the U.S. had suspended trade retaliation against seven countries—Austria, Britain, France, India, Italy, Spain, and Turkey—expired on June 30. Despite this, the U.S. has yet to impose new tariffs. Ongoing discussions include a request from European countries for assurances that U.S. tariffs on around $2 billion worth of imports, such as French Champagne and Italian handbags, remain suspended during the negotiations, including at the upcoming G20 meeting in Rio de Janeiro.
A European Union document prepared for the G20 emphasizes finalizing the international tax deal as a “top priority.” It suggests that the G20 should encourage participating countries to conclude discussions on all aspects of Pillar 1, aiming to sign the Multilateral Convention by the end of summer and ratify it as soon as possible.
In July, Canada became the eighth country to impose a unilateral digital services tax. Finance Minister Chrystia Freeland justified the move, stating that it was “simply not reasonable” for Canada to indefinitely delay its measures after the June 30 deadline passed without a Pillar 1 agreement. The U.S. contends that such taxes discriminate against its technology firms. “Treasury continues to oppose all tax measures that discriminate against U.S. businesses,” a U.S. Treasury spokesperson stated. The spokesperson urged countries to finalize the Pillar 1 agreement, and the U.S. Trade Representative’s office emphasized that OECD/G20 negotiations are the best avenue to address the challenges posed by the digital economy.
Treasury Secretary Janet Yellen, at a G7 finance meeting in May, highlighted that India and China were obstacles to finalizing the “Amount B” transfer-pricing mechanism. This mechanism aims to provide tax certainty for thousands of companies with annual revenues below $20 billion through a standardized method for calculating tax liabilities.
At the G20 meeting, Yellen will also face questions regarding the continuity of U.S. policy commitments, especially in light of President Joe Biden’s decision to end his re-election campaign and concerns about a potential return of Donald Trump to the White House.
 finance leaders meeting this week to advance the stalled plan for reallocating taxing rights on large multinational companies...){kind=link}