The US has blocked proposals for tough new global rules intended to reduce the tax avoidance policies of multinational companies, such as Apple, Amazon and Google.
Instead, watered down proposals will be presented to the G20 summit this week.
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The Organisation for Economic Co-operation and Development (OECD) had been tasked with drawing up plans for tax reform at the meeting of finance ministers on Friday. While the French government was in favour of tough rules, the US government had made it clear that it would oppose substantial reforms.
According to reports, while the US government will back moderate changes, this will largely amount to tweaks in the working of existing international tax treaties, rather than a new agreement or explicit new paragraphs tackling the taxation of borderless digital goods.
The French government, which has been the most enthusiastic promoter of global tax reform among OECD nations, had intended to link tax reform to the scandal over the collection of personal data.
It had promoted the proposals from the OECD as the biggest opportunity to tighten up international tax rules since the first bilateral tax treaties were established after the First World War, closing loopholes that have been increasingly exploited by multinational corporations ever since.
The OECD plan is expected to highlight some 15 areas where action could be taken, and would establish a timetable for reform on each of between 12 months and two and a half years.
In a February report to the G20, the OECD stated: "Nowadays it is possible to be heavily involved in the economic life of another country, for example, by doing business with customers located in that country via the internet, without having a taxable presence therein.
"In an era where non-resident [corporate] taxpayers can derive substantial profits from transactions with customers located in another country, questions are being raised as to whether the current rules ensure a fair allocation of taxing rights on business profits, especially where the profits from such transactions go untaxed anywhere."
The French government meanwhile, has taken a hard-line stance against predominantly US companies that do business in France, but which pay relatively little in taxes to the French exchequer.
