A global solution is necessary for the fair taxation of multinationals in the digital economy, and the EU is having positive discussions with the United States on the subject, the EU’s tax chief said.
Speaking May 17 at Viva Tech, a French technology summit in Paris, EU Tax Commissioner Pierre Moscovici underscored the importance of updating corporate tax rules for the 21st century so that they are based not only on physical presence, but also on digital presence. Moscovici was participating in a panel with EU Competition Commissioner Margrethe Vestager and EU Research, Science, and Innovation Commissioner Carlos Moedas.
Moscovici noted the disparity between the level of tax that tech companies pay compared with more traditional companies and conceded that despite its attempts to introduce a digital tax at the European level, the European Commission “didn’t precisely succeed.” Those efforts have led to countries adopting their own national taxes to address the issue, he added.
“But we need now to work on it at the global level,” Moscovici said, pointing to the EU’s participation in discussions at the OECD and at the G-20 to find consensus by 2020 on a long-term approach to taxing the digital economy. The OECD’s goal is to produce a workplan to present to G-20 finance ministers and leaders before their meetings in June under the G-20 Japanese presidency.
Moedas agreed on the need for a global solution to avoid unilateral action, which could have negative effects on innovation in the EU. He added that he was not worried about the message the EU debate on taxing the digital economy sends to entrepreneurs.
However, Moscovici defended EU-wide efforts to introduce a digital services tax, saying that he did not want the proposal to appear protectionist. “The problem is global and the best level to address it is global, but we also can have a regional answer,” he said.
When drafting the proposal for the DST, the commission carried out impact assessments and consulted with multinationals, which were aware they weren’t paying enough tax under the current system, according to Moscovici. Companies like Facebook must also consider the reputational effects linked to the debate, he added.
“What they want is the system to be fair, not to be protectionist, and still have very important revenues from their activities, which is fully legitimate,” Moscovici said. “Now we are entering into quite promising talks involving the United States on international taxation and I really think that we need to find an answer together in 2020.” The United States has repeatedly warned European countries against adopting unilateral digital taxes, which could harm EU-U.S. trade relations.
Vestager noted that although the commission’s state aid investigations have targeted companies like Apple Inc., it has also looked at other non-U.S. companies. “It’s not because you’re a multinational you don’t pay taxes, but if you don’t pay taxes, it’s highly likely you’re a multinational,” she quipped.
Many businesses in the EU do pay their taxes while also competing for capital, skilled employees, and customers with companies that don’t pay the same amount of taxes, according to Vestager. “It’s simply not fair competition,” she said.
The summit coincided with the conclusion of the Economic and Financial Affairs Council’s May 16-17 meeting in Brussels, where EU member states decided to collaborate on an impact assessment of the proposals that the OECD inclusive framework is considering that could serve as the foundation of an internationally agreed-upon solution to tax the digital economy.
By Stephanie SOONG JOHNSTON
Cette information est extraite de notre service d'actualité taxnotes.