Europe has chosen an awkward time to rewrite digital tax rules

A look into Egypt-EU thriving trade relations

A look into Egypt-EU thriving trade relations

"Digitalisation brings countless benefits and opportunities", said Valdis Dombrovskis, VP for the Euro and Social Dialogue.

A digital company that qualifies to be taxed must fall under certain criteria: It must make more than $1.2 billion in global revenue, more than $80 million in taxable revenue, and/or have over 100,000 users within an European Union state.

THE EUROPEAN COMMISSION (EC) has unveiled its long-awaited plan to better tax technology companies. "The US firmly opposes proposals by any country to single out digital companies", he said.

The legislation comes as the United States unsettles Europe with its own tax reform and the threat of a trade war along with reports that Facebook user data was accessed by a consultancy to help President Donald Trump win the 2016 election.

Despite the apparent climbdown toward Europe, Trump has sparked fresh trade war fears by imposing huge tariffs on Chinese imports with Beijing unveiling its own measures against U.S. goods.

Tax revenues would be collected by the member states where the users are located, and would only apply to companies with total annual worldwide revenues of €750 million and European Union revenues of €50 million. They already have a list of US goods to retaliate against that includes products from bourbon to bluejeans, from motorcycles to orange juice.

The European Parliament has already voiced its support for taxing companies with a "digital presence".

The European Commission has proposed that, if tariffs are imposed, the bloc should challenge them at the World Trade Organization, consider measures to prevent metal flooding into Europe and impose import duties on U.S. products to "rebalance" EU-U.S. trade.

Transgender individuals 'physically unfit' for army: Trump's new shocking ban
The Defense Department released a copy of a memo from Pentagon chief James Mattis dated 22 February that provided further details. That was exactly where Donald Trump was headed one day after announcing the new ban on transgender military members.

There's no risk of companies being forced to pay tax on profits twice, where they're made, and where they're reported, under the proposals. Moscovici said the proposal isn't a GAFA tax - and with some justification, as the four GAFA companies make up just 3% of the 120 to 150 businesses he expects to pay under the proposal. "We would prefer rules agreed at the global level, including at the OECD". This includes revenues from selling online advertising space, from digital intermediary activities which allow users to interact with other users and which can facilitate the sale of goods and services between them, and from the sale of data generated from user-provided information.

Unlike income tax, the revenue tax is based on where the tech companies' users live, not where the company's head office is located.

The EU feels they should be targeted at other major producers.

Amazon declined to comment.

In a common statement on Wednesday, France, Germany, Italy and Spain "welcomed" the commission's proposal and said that "the next step will be to analyse the details in depth".

Facebook, which also declined comment, changed its accounting past year to record local advertising revenues in the countries where it is present instead of its Dublin base.

The Association of Chartered Accountants (ACCA) was similarly skeptical that it would be temporary.

The EU acknowledges that fundamental problems exist in the industry, but insisted there should be trans-Atlantic cooperation instead of competition, and certainly not hindered by the weight of temporary exemptions to trade sanctions.

Recommended News

We are pleased to provide this opportunity to share information, experiences and observations about what's in the news.
Some of the comments may be reprinted elsewhere in the site or in the newspaper.
Thank you for taking the time to offer your thoughts.