Zuckerberg’s comments are likely to win him plaudits during a series of meetings with European politicians in Munich and Brussels. It also follows a realization inside Facebook that many officials across the region believe the company is not paying its fair share.
France and Austria have passed national digital tax rules that mainly cover U.S. tech giants, although Paris has suspended collection of its levy following pressure from Washington. The United Kingdom also aims to move ahead with similar plans in April despite a potential backlash from the U.S.
Last year, efforts to pass a Europe-wide digital tax collapsed due to opposition from a number of countries. But if the ongoing OECD talks fail by the end of the year, the European Commission will likely propose pan-EU rules, which may run into the same roadblocks as the original attempt.
Still, U.S. officials are unlikely to welcome Zuckerberg’s willingness to pay more abroad after Treasury Secretary Steven Mnuchin called for any form of global digital rules to be optional — a stance that puts Washington at odds with almost all other OECD members.
The U.S. also has threatened to impose billions of dollars worth of retaliatory tariffs on countries that create their own digital tax rules. That warning has led American and European officials to fret over a possible transatlantic trade war if a compromise cannot be found on a global digital tax regime by December.
The stakes are getting higher.
Any future global digital tax deal could rake in up to $100 billion annually across high-, middle- and low-income economies, according to preliminary OECD calculations. The biggest losers of corporate tax revenue would be so-called investment hubs like Ireland, the Netherlands and Luxembourg, which have low effective tax rates and a high proportion of foreign investments in relation to their gross domestic products.
Many tech firms, including Facebook, funnel much of their non-U.S. income through international headquarters in Dublin. Next week, the social networking giant will be in U.S. federal court to defend a decade-old claim from the IRS that it sidestepped up to $9 billion in taxes by moving much of its international profits to its operations in the Irish capital. The company denies any wrongdoing.