Friday, 16 November, 2018

EU's plan to tax Facebook, Amazon heads for Brussels showdown

EU tax on tech giants looks set to be delayed in defeat for Emmanuel Macron EU digital tax plan flounders as states ready national moves
Priscilla Morrison | 09 November, 2018, 00:52

France, backed by EU-presidency holder Austria, wants a law proposal by the end of the year leaving little time to get opponents on side as European tax rules require unanimous backing by all EU members.

Under a proposal from the EU's executive Commission in March, EU states would be able to charge a three per cent levy on the digital revenues of large firms, many of which are often accused of averting tax by routing their revenues and profits through low-tax states.

Irish Finance Minister Paschal Donohoe has consistently said he believes that is the right forum for reforming multinational tax. "At the same time, we agree today that we will implement a revised Commission proposal on the taxation of digital services if, against our expectations, a broad global consensus can not be reached by summer 2020", Scholtz said.

Paris claims the tax would be a vote-winner in next years European Parliament elections, which have been framed as a battleground between pro-EU and Eurosceptic parties.

But Ireland, which hosts the European headquarters of several USA tech giants, leads a small group of otherwise mostly Nordic countries that argue the tax will also punish European companies and stoke Washington's anger. "What kind of reaction would we have if this model was imposed on us?"

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Spearheaded by France, the plan has met resistance from countries such as Ireland and Sweden, which question the wisdom of the European Union going it alone given the global nature of digital services.

Last week, United Kingdom chancellor of the Exchequer, Philip Hammond, outlined plans to hit tech giants such as Google, Facebook, Amazon and Apple with a DST from 2020. OECD tax head Achim Pross told Handelsblatt that the key is to avoid an interim solution that obstructed a lasting global deal.

The option to introduce the tax in 2021 was discussed at an informal finance ministers' meeting in September and will be addressed again at a meeting of the EU's Economic and Financial Affairs Council on Tuesday, sources told Handelsblatt. At a meeting of European finance ministers yesterday Germany urged for the first time a revision that would exclude activities that could be linked to carmakers.

Some EU member states such as Britain, Spain and Italy are working on national versions of a digital tax, with Singapore and India also planning their own schemes.

Arriving at the meeting Tuesday in Brussels, the Danish minister of Finance, Kristian Jensen, said of his side: "Everything is possible in politics but I think that it is very hard to reach an agreement on the taxation of the digital economy".

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