Spain approves the Google rate with the US threat to impose new tariffs for 900 million euros

The European Union will launch its own proposal in early 2021, while negotiations with Washington remain stalled.

Spain will approve next week its own Google with which he hopes to tax technology companies and with which he wants to raise some 968 million euros per year. The Senate Finance Committee He will address this Thursday his opinion together with that of the Tobin tax, which once ratified will be submitted to the Plenary Session of the Lower Commission for final approval. We are facing one of the first promises of the government which has been seeking approval since the summer of 2018 and perhaps the main source of new revenue for the Executive for the 2021 Budgets. Following the parliamentary procedure, the liquidation may be carried out as of February of next year. However, the new tax widely resisted by the technology sector may have unexpected consequences for the Spanish economy, if the United States goes ahead with its threats to impose new tariffs on our country in retaliation for the Google. The objective is that the big technology companies pay taxes for their effective activity in each national market and not do it through other countries with a lower tax burden. A fiscal equity that in the Spanish case is sought through the Tax on certain digital services. This tax will be levied on companies with total annual income of at least 750 million euros and with income in Spain of more than three million euros. It is aimed at online advertising services, online intermediation services and the sale of data generated from information provided by the user during their activity or the sale of metadata. Technology tax In the spotlight large foreign digital companies such as Google, Facebook, Amazon o Apple, all of them American. In this sense, United States and Europe They have been negotiating for months within the framework of the OECD a common framework for these companies to pay taxes in the place where they carry out their activity, but given the impossibility of reaching an agreement, Spain has gone for free. At the beginning of June, the Office of the United States Trade Representative opened an investigation -protected in section 301 of the United States Trade Law- into the European Union and nine other countries, including Spain, regarding taxes on digital services. In addition to the EU and Spain, the research included Austria, Brazil, Czech Republic, India, Indonesia, Italy, Turkey and the United Kingdom. Two weeks later, the US Treasury Secretary Steven Mnuchin, sent a letter to four finance ministers of Europe among those who were Spain, UK, Italy and France, threatening them with retaliation if they went ahead with the so-called Google tax. The US also announced that it was leaving the negotiating table. A day later, Brussels notified the US president, Donald Trump, that it will respond “in unison” to possible sanctions of Washington by the digital rate prepared by the EU and several of its member states, including Spain. in neutral What has happened since then? Negotiations remain deadlocked. The European Commissioner for the Economy, Paolo Gentiloni, told CNBC in early September that the EU was preparing its own proposal. “If we do not achieve results at the global level, the European Comission will present its own proposal next year”. Regarding the negotiation with the US, he indicated that since June there has been some progress at a technical level, but now everything is stopped by the US elections. For his part, the French Minister of Finance, Bruno the Mayor -one of the main promoters of the rate- insisted a few days ago on continuing to blame U.S of the blockade “It is very clear, U.S does not want a digital tax in the OECD. So they are raising obstacles that prevent us from reaching an agreement even though the technical work is done.” In any case, and despite blocking a joint response from the OECD and waiting for a proposal from the European Union at the beginning of 2021, Spain has decided to go ahead, always with the intention of adapting its regulations to what is decided in Europe or throughout the world. The problem is that the experts consulted indicate that making this move alone -and despite the declared support of the EU- exposes Spain to a series of new unilateral tariffs from the United Statesyes Some tariffs that can only be implemented against Spain and that will not change no matter how much Brussels responds with similar measures. We are talking about figures ranging from 700 to 900 million euros in tariffs. in 2019 Spain made exports to U.S worth 13,739 million euros -the seventh destination of Spanish products- where the bulk of these shipments (10,152 million) were industrial products and technology, followed by the agri-food sector with 12% of the total, about 1,600 million a year. Tariffs to Spain Within these products leading the ranking are electrical machinery, cars, fuels, equipment goods and within food, meat products, olive oil and olives reign. The only precedent for an investigation of this type is the one carried out in France. In February of last year, the US Department of Commerce concluded that the Gallic country violated international treaties by trying to impose a unilateral tax on US technology companies and announced tariffs worth 2.14 billion euros ($2.4 billion) on products such as cheese, perfume, soap, porcelain, yogurt and butter. In this way, the experts consulted by Invertia indicate that taking the Gallic case as a reference and based on the weight of the exports of France and Spain in the United States, respectively, the tariffs to our country could be around between 700 and 900 million euros. In the case of Spain, the exported products have a higher added value, so this bill could even rise once the investigation to our country is concluded.