EU Countries May Enact Their Own Digital Tax

September 21, 2018 International Tax Cooperation

internet taxBRUSSELS – The EU’s proposed tax on global digital companies has seen continued delays, so some member states may soon take matters into their own hands.

The Director if the Centre for Tax Policy and Administration at the OECD, Pascal Saint-Amans, has suggested that the EU may see the implementation of a temporary digital tax on the revenues of global internet giants.

The EU is currently investigating the possibility of levying a new tax on the earnings of digital behemoths such as Facebook and Google, in an effort to prevent the companies from avoiding taxation by shifting their profits away from the countries where sales are made and towards low-tax jurisdictions.

However, finding consensus on the exact details and functionality of such a tax is proving to be difficult.

Pascal Saint-Amans claims that in an effort to address the problem as soon as possible, EU countries may agree to a time-limited tax aimed at digital multinationals.

Based on previous suggestions, the tax could take the form of a 3 per cent levy on the revenues of large multinational businesses.

The tax would be collected in the country where the sale is made, instead of the country in which the profit is declared.

In order to avoid impacting smaller businesses, the tax would have a minimum threshold of EUR 750 million in global revenue, with at least EUR 50 million to come from the EU.