Governments seek to save global tax deal by end June

U.S. Treasury Secretary Janet Yellen in Dublin

PARIS (Reuters) - Nearly 130 countries recommitted on Thursday to save the first pillar of a global tax deal on highly profitable multinationals by the end of June, the co-chairs of a three-day meeting in Paris said after the talks failed to produce an agreement.

Officials from 127 countries and jurisdictions have struggled for months to finalise the terms of an international treaty about how to reallocate taxing rights across borders, mainly on U.S. big digital companies.

The co-chairs of the meeting at the Organisation for Economic Cooperation and Development said in a statement that countries were "nearing completion of the negotiations", adding the aim was still to finalise an agreement by the end of June.

The multilateral treaty is supposed to replace hotchpotch of national digital services taxes opposed by Washington, which sees them as unfairly targeting U.S. digital giants.

If the absence of an agreement, a standstill deal on national digital services taxes could expire in July, triggering their return and potentially reigniting trade tensions between the U.S. and some of its European allies.

The treaty codifies how governments are to reallocate taxing rights on about $200 billion in profits from the biggest and most profitable multinationals to the countries where their sales occur.

It is the first pillar of a landmark two pillar 2021 deal, which also included plans to set a global minimum rate for corporate taxes at 15%. The second pillar is in the process of being implemented.

Italian Economy Minister Giancarlo Giorgetti said this month that the first pillar negotiations would not be finalised as planned in June, citing reservations from the United States, India and China.

U.S. Treasury Secretary Janet Yellen told Reuters on the sidelines of a G7 finance ministers meeting last week that the United States had "red line" issues in the talks about transfer pricing.

She said India "will not engage with us" and said China was "all but absent" in the negotiations.

(Reporting by Leigh Thomas; Editing by Alison Williams)