EU min­is­ters make push for Google, Face­book tax

Kuwait Times - - BUSINESS -

Google and Face­book may face higher tax bills in Europe as the EU rushed yes­ter­day to change rules so that more of Sil­i­con Val­ley’s mega prof­its fall into pub­lic cof­fers. Pub­lic anger against the bil­lions of eu­ros earned by on­line be­he­moths is grow­ing louder in Europe and EU fi­nance min­is­ters meet­ing in Es­to­nia pledged to make sure the com­pa­nies pay a fairer tax. But di­vi­sions emerged on how to go about tak­ing on the giants, with sev­eral mem­ber states wor­ried that a tax in Europe could push the com­pa­nies to set up shop in the US or Asia.

In the dig­i­tal age “the cur­rent tax­a­tion sys­tem no longer ap­plies and that is why we have to find an­other so­lu­tion,” said Toomas Ton­iste, fi­nance min­is­ter of Es­to­nia, which hold the EU’s six-month ro­tat­ing pres­i­dency. Led by France and Ger­many, big EU pow­ers urged their bloc part­ners to ex­plore an emer­gency tax so that the giants pay tax where they earn rev­enue, in­stead of on prof­its booked in a low-tax EU HQ of their choice, of­ten Ire­land or Lux­em­bourg.

“We are now about 10 coun­tries to back this idea,” said French Fi­nance Min­is­ter Bruno Le Maire as stepped into the talks, adding that he hoped for a firm pro­posal by De­cem­ber.

“We don’t want a Europe at the heel of oth­ers,” he added. But the road ahead will be dif­fi­cult. Europe-wide tax re­form is a huge headache in the European Union, re­quir­ing una­nim­ity of all 28 states, which has proven nearly im­pos­si­ble on tax is­sues.

‘They’re daft’

Min­is­ters from smaller mem­ber states al­ready hinted at dif­fi­cul­ties, warn­ing that they would much pre­fer the problem be ad­dressed at the in­ter­na­tional level, such as at the G20 or through the OECD, the club of rich na­tions. “I think we should be very care­ful not to tax on what we are go­ing to live on in the fu­ture,” said Danish Fi­nance Min­is­ter Kris­tian Jensen.

“I am... al­ways scep­ti­cal by new taxes and I think Europe taxes heav­ily enough,” he added.

The OECD has also poured doubt on the pro­posal. Gen­er­ally speak­ing, “taxes on rev­enues, they’re daft”, said Pas­cal Saint-Amans, the OECD’s tax pol­icy di­rec­tor dur­ing a hear­ing on Wed­nes­day at the French par­lia­ment.

But “po­lit­i­cally, I un­der­stand that it may be nec­es­sary, given that re­form led by the OECD at the G20 level could take years to achieve. Bri­tish Fi­nance Min­is­ter Philip Hammond warned against an­ger­ing Wash­ing­ton, which could aban­don OECD tax re­form in re­tal­i­a­tion, sources fa­mil­iar with the mat­ter told AFP.

“We should see what the United States thinks be­cause a lot of these com­pa­nies are US based,” said Span­ish Econ­omy Min­is­ter Luis de Guin­dos. The com­mis­sion, the EU’s ex­ec­u­tive arm, has been tasked to draw up a set of so­lu­tions, in­clud­ing the French pro­posal, in time for an EU lead­ers sum­mit in Tallinn on Septem­ber 29.

“We can­not have a whole sec­tor of the econ­omy that pretty much es­capes tax­a­tion,” EU’s econ­omy com­mis­sioner Pierre Moscovici, who will shep­herd the plan, told France In­ter ra­dio. Euro­peans have be­come in­creas­ingly ag­gres­sive against US tech­nol­ogy giants seen by of­fi­cials as gain­ing too much power, with Ama­zon and Ap­ple also un­der scru­tiny. More­over, sev­eral na­tional au­thor­i­ties in the EU have opened up tax fights with Google, Airbnb and other In­ter­net giants. A French court, cit­ing EU law, ruled in July that Google was not li­able for 1.12 bil­lion eu­ros ($1.27 bil­lion) in taxes claimed by the state. France ap­pealed the de­ci­sion. — AFP

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