Debate heats up over how countries tax Big Tech companies

FRANKFURT, Germany (AP) — An international debate over how countries tax big U.S. technology companies such as Google, Amazon and Facebook is heating up, presenting a challenge for new President Joe Biden's administration.

There's a mid-year deadline for talks on a global deal that aims to defuse trade disputes with France and other countries that are imposing go-it-alone taxes the U.S. sees as discriminatory.

France has imposed its own 3% tax on digital revenue for large tech companies — in effect singling out the U.S. tech giants — but has said it would withdraw the tax in favor of an international solution being negotiated under the auspices of the Organization for Economic Cooperation and Development, a Paris-based international organization of 37 advanced economies.

Experts and officials say time is getting short. Manal Corwin, a tax principal at professional services firm KPMG and a former Obama administration Treasury official, said that digital taxes multiplying outside the OECD process “are threatening to trigger a trade war.”

U.S. trade officials have called unilateral digital taxes unfair and threatened trade retaliation against French goods, but have held off imposing sanctions.

Finance officials from 137 countries are convening online Wednesday to resume negotiations over how best to make sure multinational companies don't avoid taxation by shifting activities and profits among countries. One key question is how to appropriately tax multinationals — such as tech firms — that may have no on-the-ground presence in a country but nonetheless do substantial business there in the form of digital activities such as online advertising, sale of user data, search engines, or social media platforms.

The talks are about how to allocate part of a company's revenue to the country where its services are...