Bloomberg

Why 'digital taxes' are the new trade war flashpoint

U.S. Treasury Secretary Steven Mnuchin pauses during a panel session at the World Economic Forum in Davos, Switzerland, on Jan. 24, 2020. Foto: Bloomberg/Jason Alden

The U.S. decision to withdraw from international efforts to harmonize global tax rules for digital companies risks triggering a new trade war. The move came after the U.S. and a group of nations failed to agree on the best way to tax revenue from digital companies such as Facebook and Alphabet's Google. It's a way for cash-strapped governments to tap deep-pocketed companies whose multinational earnings often escape the taxman's grip. The U.S. says digital taxes unfairly discriminate against American firms and has threatened retaliatory tariffs that could exacerbate the worst global economic downturn since the Great Depression.

1. How does a digital tax work?..

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