Extend standstill on digital services tax: EU companies tell OECD

Extend standstill agreement on digital services tax: EU companies tell OECD

EU digital companies have written to the OECD asking it to extend the standstill agreement on digital services tax.

The Multilateral Convention, agreed in October 2021, requires members to remove all digital services taxes and other relevant similar measures, and to commit not to introduce such measures until December 31, 2023.

In its letter dated July 10, Luca Cassetti, Secretary General of Ecommerce Europe, said: “In view of the fast-approaching end date of this moratorium, [we] would like to encourage the OECD/G20 Inclusive Framework to agree on an extension of the digital services tax standstill agreement to ensure sufficient time between a possible international commitment in July 2023 and the following necessary adoption of member states.”

Ecommerce Europe is the sole voice of the European Digital Commerce sector. It represents, via its national associations, more than 150,000 companies selling goods and services online to consumers in Europe. 

The letter expresses concerns on the timeline announced for completing the work on Pillar One in July 2023 and the entry into force in 2024.

“As the inter-governmental discussions are currently going on, we would like to point out that a longer timeframe may be necessary to complete the negotiations and develop rules that work for tax administrations. Finally, national legislative frameworks may need a sufficient lapse of time to ratify and implement the Amount A’s MLC,” the letter states.

The letter adds: “A period of gap between the end of the current standstill and the effective entry into force of the MLC will create political pressure for unilateral DSTs and instability in the international tax system, resulting in double and even multilayer taxation.”

The letter concludes: “Additionally, the spillover effect of multiple DSTs may compromise the ongoing work to achieve a multilateral agreement at the OECD/G20 Inclusive Framework level, creating legal uncertainty and instability for companies.”