The governments of 137 countries have agreed to draft new rules for taxing multinational tech firms, a milestone that could eventually lead to heightened levies on the likes of Amazon.com Inc. and Google LLC.

The news was announced today in Paris by Pascal Saint-Amans, the head of tax policy at the Organisation for Economic Cooperation and Development. The OECD hosted a summit this week in the French capital where tax officials from around the world met to discuss the development of an international tech levy.

Under the roadmap that the 137 participating countries hammered out, an initial draft of the tax code will have to be delivered in early July. Tax officials will then have until the end of the year to come to an agreement on a final version. The negotiations, Saint-Amans told reporters, are moving along at such a brisk pace “because what is at stake is a massive trade war.”

Concerns over a trade dispute stem from the fact that U.S. tech giants are facing growing pressure in the European Union over their use of tax minimization methods. Three years ago, the EU’s executive branch issued a decision ordering Apple Inc. to pay back 13 billion euros in back taxes to Ireland. More recently, France passed a levy that would have required tech giants to pay up the equivalent of 3% of their local revenues, but the measure was put on ice after the U.S. raised the possibility of retaliatory tariffs.

Several other European countries, including Italy, have also taken steps to impose higher taxes on multinational tech firms.

The consensus reached at the OECD summit this week establishes some ground rules for the negotiations. To start, the proposed tax policies won’t focus exclusively on tech companies but will also apply to certain other companies with a large international presence, including potentially automakers. Enterprises that operate in the business-to-business market will be excluded.

Second, the officials attending the OECD event agreed to put  off negotiations over a “safe harbor” proposal brought by the U.S. until the other details are sorted out. The safe harbor proposal calls for governments to let companies choose whether they wish to subject themselves to the new tax codes or stick with existing arrangements.

There are other points that negotiators will have to resolve as well, including how to factor in the size of a country’s economy when calculating the amount of local tax that a company owes. Moreover, there are reportedly disagreements on what minimum profit threshold should be set for the levy.

Either way, the end result of any agreement will likely be higher taxes on the tech industry’s largest players. The topic may appear on Facebook Inc. Chief Executive Officer Mark Zuckerberg’s agenda next month during his planned trip to Brussels to meet with EU regulators.

Photo: Unsplash