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European plans turnover tax on Amazon, Google, other tech giants

European Union finance ministers to discuss plans this week

The finance ministers of France, Germany, Italy and Spain are planning for the European Union (EU) to impose a turnover tax on internet giants like Amazon and Google, stressing that such a move will enable them to clamp down on what they regard as tax avoidance by the predominantly US ‘digital multinationals’.

The charge is being led by what will be, post-Brexit, the four largest countries in the European Union, but is also likely to be resisted by smaller, lower tax countries, such as Ireland and Bulgaria.

The plan was disclosed in a letter leaked to the Reuters newswire, which had been signed by French Finance Minister Bruno Le Maire, German Federal Minister of Finance Wolfgang Schaeuble, Italy’s Minister of Economy and Finances Pier-Carlo Padoan, and Spanish Minister of Economy and Competitiveness, Luis de Guindos.

“We should no longer accept that these companies do business in Europe while paying minimal amounts of tax to our treasuries,” the ministers argue in a letter addressed to the EU’s Estonian presidency, and copied to the European Commission.

The ministers plan to extract more tax from the multinationals by creating what they call an ‘equalisation tax’ based on turnover, rather than profit. “The amounts raised would aim to reflect some of what these companies should be paying in terms of corporate tax,” claim the ministers in the letter.

It comes at the same time as the EU looks to tax companies where they supposedly “create value”, rather than where they choose to be resident in the EU. That has encouraged companies like Apple, Dell and Google to choose to be resident in low-tax Ireland, and to pay corporate taxes there, rather than high tax France or Germany.

EU pressure to force Ireland to increase its corporate tax rates have been fiercely resisted as Ireland’s tax policy has also helped create a plethora of well-paid jobs in the technology sector.

EU plan for turnover tax on Amazon, Google and other web giants will be discussed by finance ministers this week.

 

 

 

 

 

 

 

 

Tony Nwakaegho with Agency Report

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