Report: EU Adamant To Push Forward With A Digital Tax Reform

September 20, 2017 - Written By Dominik Bosnjak

The European Commission remains adamant that the political bloc should push forward with its digital tax reform regardless of the global stance on the issue and whether its example is followed by other nations, Reuters reported on Wednesday, citing a draft report that’s expected to be adopted tomorrow and publicly presented on September 29. The main argument outlined in the report is said to be the difference between taxes paid by multinational Internet companies and those imposed on traditional firms with a worldwide presence, with the latter supposedly paying twice as much taxes than the former within the European Union. The report is also said to be referencing the discrepancy between annual revenue increases of the physical retail industry and the e-commerce sector, noting how digital retailers have been growing by approximately 32 percent on a yearly basis, whereas their traditional competitors have only been recording a revenue growth of one percent year-on-year from 2008 to 2016. It’s still unclear whether that argument means to imply that digital companies can afford to pay more taxes in Europe, that they’ve been indirectly inhibiting their competitors by avoiding taking their fair share of the tax burden, or both.

News of a new draft report signaling that the European Commission will move forward with its tax initiative comes shortly after finance ministers of its member states met in Estonian capital Tallinn to discuss this very issue, debating on whether they should change the regulatory framework in order to account for practices of companies like Google, Facebook, and Amazon. All three and others have previously faced allegations of paying too little taxes on the Old Continent by moving profits to EU member states with low tax rates despite earning them on sales recorded in other parts of the political bloc. Some countries like Luxembourg are still opposing the proposed digital tax reform though it remains to be seen if they formally veto it should the initiative comes closer to being enacted.

The first concrete moves on the subject of a new tech tax in Europe are expected by the end of the year. While many details remain to be ironed out until a new system could be put into place, the basic idea that the Commission is currently exploring is to stop taxing digital companies based on their profits and start taxing a portion of their revenues, as outlined in a previous report authored by Dutch Member of the European Parliament Paul Tang.