Technology giants face European 'digital tax' blow

Technology giants face European 'digital tax' blow
From BBC - March 21, 2018

Big technology firms face paying more tax under plans announced by the European Commission.

It said companies with significant online revenues should pay a 3% tax on turnover for various online services, bringing in an estimated 5bn (4.4bn).

The proposal would affect firms such as Facebook and Google with global annual revenues above 750m and taxable EU revenue above 50m.

The move follows criticism that tech giants pay too little tax in Europe.

EU economics affairs commissioner Pierre Moscovici said the "current legal vacuum is creating a serious shortfall in the public revenue of our member states".

He stressed it was not a move against the US or "GAFA" - the acronym for Google, Apple, Facebook and Amazon.

According to the Commission, top digital firms pay an average tax rate of just 9.5% in the EU - far less than the 23.3% paid by traditional companies.

Its figures are disputed by the big tech firms, which have called the tax proposal "populist and flawed".

Countries including the UK and France have accused firms of routing some profits through low-tax EU member states such as Ireland and Luxembourg.

Big US tech companies have argued they are complying with national and international tax laws.

However, the Commission said it wanted to tax companies according to where their digital users are based.

Analysis: Kamal Ahmed, BBC economics editor

It does not appear that Britain's journey towards the exit door of the European Union is causing too much consternation in Brussels over whether these new tech tax proposals will ever be implemented.

The EU commissioner behind today's proposals has told me "there is no blocking attitude from the UK".


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