A delegation of S&D MEPs travelled to the United States this week to meet leading digital and hi-tech players in Silicon Valley, and to discuss how best to meet the challenges and opportunities of the new digital environment.
There is a consensus that the digital economy is relatively undertaxed when compared with traditional businesses. Certain inherent characteristics such as reliance on cross-border provision of services without physical presence, easy transfers of intangible assets, and novel ways to create value make it particularly easy for enterprises to limit their tax liabilities. In order to provide a solution to this problem, in March 2018 the Commission adopted the ‘fair taxation of the digital economy’ package, comprised of two proposals. One concerns a permanent reform of corporate tax regime while the second is a proposal for a directive on the common system of a digital services tax on revenues resulting from the provision of certain digital services, which would apply as an interim measure until the permanent reform has been implemented. The tax is to cover businesses above two thresholds: total annual worldwide revenues exceeding €750 million and annual revenues in the EU exceeding €50 million. The proposed single rate is at 3 %, levied on gross revenues resulting from the provision of certain digital services where user value creation is essential. The stakeholders and the Member States seem to be divided on the issue.
The Committee calls for a fair, consensus-based international solution at the OECD level which contributes to achieving fair taxation principles and fair revenues for small and large countries alike.
The auditors have today published a Background Paper on the collection of VAT and customs duties on e-commerce as a source of information for those interested in the subject.
The audit includes visits to the Netherlands, Austria, Germany, Ireland and Sweden. The report is expected to be published in mid-2019.
Report finds systematic tax evasion & abuse of legal loopholes by tech giant.