Several senior officials told POLITICO the stand-off between France and the US may have scuppered chances of reaching a deal on how to tax the digital world.
The growing pessimism about overhauling how the digital economy is taxed comes as tensions mount between France and the United States over Paris' digital tax rules, which overwhelmingly target American tech firms.
Both countries are helping to lead digital tax negotiations at the Organisation for Economic Co-operation and Development (OECD), the Paris-based group of mostly rich Western countries.
Under the current OECD proposals, new rules would allow all countries to tax the digital operations of companies worldwide, beyond a certain threshold, and create a minimum level of tax that all firms must pay on their online activities.
Doubts about reaching a global agreement on digital tax have been steadily growing.
U.S. officials have become increasingly vocal about the slew of domestic proposals from European countries to impose levies on the digital economy — efforts that have primarily focused on American tech giants like Apple and Amazon.
Alongside France's laws, which include a 3 percent digital services tax for firms with more than €750 million of global revenue, including €25 million in France, Spain, Austria and the United Kingdom have all moved tentatively toward their own digital tax rules. Italy and Austria’s rules came into force on January 1.
Efforts to create a pan-European Union digital tax regime also are back on the agenda under the new European Commission despite pushback from countries like Ireland and Luxembourg that have attracted thousands of international companies to their shores by offering them low corporate tax rates.
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