European Interest

EU’s controversial tech tax plan returns to the table


European Union finance ministers are slated to meet again on November 6 to try to strike a balance between luring business and addressing popular discontent about companies not paying their fair share.

Meeting in Brussels, they will try to push forward a legislative proposal for a 3% levy on the European sales of companies with a global annual revenue of €750m or more, such as Facebook Inc., Alphabet Inc. and Inc. The tech industry has pushed back against the tax, saying it would chill investment.

As reported by Bloomberg, France is spearheading plan which has met resistance from countries such as Ireland and Sweden. Critics question the wisdom of the EU going it alone given the global nature of digital services.

Complicating things further, the tax risks triggering the ire of President Donald Trump amid a transatlantic trade spat, as most of the affected companies would be US-based.

“Where changes like this have been made in the past, they’ve been made on the basis of global consensus and cooperation through the OECD,” Irish Finance Minister Paschal Donohoe said on November 5, referring to the Organisation for Economic Co-operation and Development. “It continues to be my own view that this is the safest way of doing this.”

However, French Finance Minister Bruno Le Maire has called for an agreement to be reached by year’s end. “It is this political decision that counts in our eyes, even if we are open to technical improvement of the commission’s proposal,” he said.

According to confidential memos circulated among member states and seen by Bloomberg, the idea behind the proposed EU tax is to focus on where tech users are based, rather than where a company places its headquarters. The levy would apply on revenue from “targeted advertising” and “intermediation services,” while the tax will be imposed on turnover, irrespective of profit or loss, and won’t be connected to or “creditable”.

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