Апреля 24 2018

European Union launches £4.4bn tax raid on tech giants

Апреля 24 2018, 06:54 | Alonzo Simpson

Big internet companies facing 3% levy on turnover if Commission proposals approved

Brussels raises a 3% tax on technology sales

The European Commission announced plans Wednesday, to introduce a new digital taxation plan aimed at ensuring tech giants pay their fair share to the countries they earn significant profits from.

Its implementation will be fiercely fought by the US commerce and treasury departments and the American companies - Facebook, Alphabet (owner of Google), Amazon and Twitter, among them - that dominate the digital commerce industry in Europe and around the world.

The odds of the plan actually passing seem somewhat low.

Under EU law, firms like Google and Facebook can choose to book their income in any member state, and many companies choose low-tax nations like Ireland, the Netherlands or Luxembourg. Even if this proposal doesn't pass, it at least starts to put pressure on these companies going forward.

In one of the two offered proposals, companies eligible to be taxed at the new rate only have to meet one of the criteria of either exceeding €7 million in annual revenues in an European Union member country, having at least 100,000 members in a member country over the course of a year or 3,000 business contracts for digital services in a year.

The European Commission, the EU's executive arm, says tech companies use the profit-shifting method to reduce their tax burdens. There is a feeling that USA tech companies like Apple, Amazon, and Google are using European countries to evade or reduce their tax bills, a complaint highlighted by the decision to require Apple to pay billions of taxes back to the Irish government.

The EU tax would affect revenue from digital advertising, paid subscriptions and the selling of personal data.

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Last year, the European Commission fined Google almost $3 billion for abusing its dominant market position, while companies like Apple, Amazon and Qualcomm have also been investigated or penalized. It's worth noting that this would only apply to large companies, with revenues that exceed 750 million euros worldwide and 50 million euros inside the EU.

Trade lobbyists were not pleased by the new proposal. "We need to urgently bring our tax rules into the 21st century by putting in place a new comprehensive and future-proof solution", said commission vice president Valdis Dombrovskis.

It has drawn up a double-layered plan to reform rules on taxing digital firms where they make sales - regardless of where their physical presence is.

THE EUROPEAN COMMISSION (EC) has unveiled its long-awaited plan to better tax technology companies.

The tax would be collected in countries where the users are located.

It said the new measures could be incorporated into the planned Common Consolidated Corporate Tax Base - a plan the Commission has already presented to allocate the profits of large multinational groups based in part on where their products or services are sold.

The lobby group which represents around 700 United States companies operating from Ireland suggested that proposals, which are being discussed today at a meeting of the commission, should be agreed internationally through the OECD.

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