Tech

Google, Amazon, Facebook: EU Commission wants to introduce its own digital tax

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Is there a European digital tax coming? Paolo Gentiloni, Economic Commissioner of the European Union (EU), has said that the EU could introduce its own tax for the large digital companies. A worldwide digital tax was planned, but the US has left the negotiations for the time being.

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“If there is no global agreement, we as the Commission will present drafts on both digital tax and minimum taxation in the coming year”Gentiloni said at a meeting of EU finance and economic ministers in Berlin, as reported by the German Press Agency (dpa). Something urgently needs to be done, stressed the Commissioner, “now or never”.

Many criticize the fact that the large digital companies such as Google, Amazon, Facebook and Apple generate large sales in countries in which they have no official company headquarters and therefore do not pay tax on sales there. It is estimated that the digital corporations don’t even pay half as many taxes as traditional industrial companies.

The tax should apply globally

The 20 most important industrialized countries (G20) announced at the beginning of the year that they would create a worldwide minimum taxation for international corporations. An internationally applicable tax should make it unattractive for corporations to flee to so-called tax havens.

In June, however, the US government asked to pause negotiations. The rationale was that governments could then focus on tackling the Covid-19 pandemic. US Trade Representative Robert Lighthizer took the opportunity to once again make the US government’s stance on the digital tax clear: “A number of countries have decided that the easiest way to get money is to tax third-party companies – and it happens that our companies are at stake.”

France is a pioneer

If there is no global agreement, some countries will probably introduce their own digital tax, while others will not. The French government announced such a tax at the beginning of last year and thus aroused displeasure among US President Donald Trump, who threatened France with punitive tariffs. The tax is therefore suspended until the end of this year.

But the French Finance Minister Bruno Le Maire has urged that the EU should introduce such a tax in early 2021 if no international agreement can be found. A first attempt at a European digital tax failed last year.

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