Google, Facebook face big tax bill
Google, Facebook and Amazon may have to pay billions of dollars more tax each year after the European Commission finalised a proposal to let European countries impose a 3 per cent tax on the revenues of big digital businesses.
The new tax would apply to internet giants that had an annual turnover of more than €750 million (NZ$1.4 billion) from online advertising, internet marketplaces and from supporting the ‘‘gig economy’’, and could also impact dozens of other companies including Twitter, Uber and Airbnb.
The commission said the tax was being proposed as an interim step while it worked on a longer term measure.
A spokeswoman for New Zealand Revenue Minister Stuart Nash said on Tuesday that the Government would soon receive advice from officials on whether it should introduce similar ‘‘interim measures’’.
The European Commission forecast its proposed revenue tax would raise about €5b a year for EU member states.
The norm of the international tax system is that companies are taxed on their profits in countries where they operate.
But the commission said the current rules failed to recognise the new ways in which profits were created in the digital world and ‘‘in particular the role that users play in generating value for digital companies’’.
The commission said its next step would be to submit legislative proposals to the European Council for adoption and to the European Parliament for consultation.
Associated Press reported the EU’S 28 members would now need to decide whether to endorse the plan. France, Britain, Germany, Italy and Spain backed the commission but dissenters were concerned about the impact on relations with the United States.
The Organisation for Economic Co-operation and Development (OECD) hopes to broker a consensus by 2020 on the best approach to taxing digital businesses.
Google’s spokesman in Sydney, Nic Hopkins, said it had no comment on the development in Europe. Facebook has also been contacted for comment.