Tech giants to face 3% tax on revenue under new EU plan
BRUSSELS: Large digital companies operating in the European Union, such as Alphabet Inc. or Twitter Inc., could face a 3% tax on their gross revenues based on where their users are located, according to a draft proposal by the European Commission.
The draft, seen by Bloomberg, was circulated on Friday and outlines how a targeted levy on gross revenues would increase the tax bill digital giants face, as the bloc seeks to raise money from an industry it says provides less than it should to public coffers. EU (European Union) countries have been looking into methods to tax digital companies, including Amazon.com Inc. and Facebook Inc., in a way that captures the true value created in the region.
The commission’s planned revenue tax, which is expected to be proposed on March 21, would only represent a targeted, short-term solution. The bloc also plans to propose a more comprehensive, longer-term approach that will focus on a digital permanent establishment.
The scope of the planned tax would cover companies offering services such as advertising or the sale of user data, according to the draft prepared by the EU’s executive arm. It would also cover services provided by multi-sided digital platforms, which let users find and interact with each other and where users supply goods and services directly to each other.
The levy would cover companies that have annual worldwide total revenue exceeding 750 million euros ($920 million) and total taxable annual revenue from offering digital services in the European Union above 50 million euros, according to the draft. The parameters may change until the proposal is approved.