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EU finance ministers target tech giants' revenues

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EU finance ministers target tech giants' revenues

The long anticipated move is an initiative of France, Italy, Germany and Spain and aims at replacing the current system of taxing profits in the country where the tech giants are based, with taxing instead revenues in the countries where sales are generated.  
 
European states "could have lost 5.4 billion euros in tax revenues from Google and Facebook between 2013 and 2015”, Reuters reported. "We should no longer accept that these companies do business in Europe while paying minimal amounts of tax to our treasuries. Economic efficiency is at stake, as well as tax fairness and sovereignty”, says a memo obtained from Politico and circulated ahead of the Tallinn meeting.
 
According to the Financial Times, France will propose to set the tax at somewhere between 2 and 5 per cent of turnover. The paper also points out that taxation based on revenues rather than profits would be extremely unusual in Europe, but that a precedent was set with last year’s agreement between the UK and Google, where in addition to £130m in back taxes  Google agreed to a revenue-based future levy. 
 
Politico points out that, while EU tax reforms need unanimous approval of the Members, obvious pushback is expected from Ireland, Luxembourg and Malta, countries that attract business through favourable tax policies.
 
At any rate, in the event that an agreement were reached on the concept of a digital taxation that would be more equitable towards European businesses, an even more complicated discussion would then need to start on the details of rates and calculations. 

Author

Elena Perotti's picture

Elena Perotti

Date

2017-09-15 15:38

Author information

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