European Union scraps digital tax plan

The EUropean Union is to wait for global reforms rather than implement its own plans for an EU-wide digital tax.

The announcement was made, following months of often fractious talks, at a meeting between EU finance ministers in Brussels.

France had pushed for a deal to ensure multinational tech firms pay their fair share and end tax avoidance disputes going back years.

It is among countries, which also include Britain, Italy and Spain, that are now likely to push ahead with their own national schemes.

That is because the work being done for the G20 group of nations through the Organisation for Economic Co-operation and Development (OECD) is also yet to settle on a concrete plan.

It is hoped a worldwide system will be created by 2020.

Image:Emmanuel Macron had suggested further delays on an EU digital levy would send the wrong message

The OECD - as the EU had tried to do - wants to tax companies in a digital world where value is created in one country and taxed in another.

It is currently working on several proposals.

The UK's tax regime has not been immune from criticism that it currently penalises bricks and mortar businesses.

Chancellor Philip Hammond announced in his last budget that the country would introduce a digital Services tax on large, profitable online-focused firms such as Google and Facebook from April 2020 - should no OECD agreement be in place.

Mr Hammond believes it would raise £400m annually.

The EU's plan for a 3% levy was similar.

It fell down because several countries, Sweden, Denmark and Ireland, opposed it.

The EU said it would reopen the issue if the OECD's planned reforms were delayed.