First cracks emerge in EU plan to raise on­line giants’ tax bill

Any so­lu­tion would need to be backed at global level

Arab News - - BUSINESS -

TALLINN: First signs of open skep­ti­cism ap­peared on Saturday over a EU plan to raise the tax bill of dig­i­tal multi­na­tion­als, as some fi­nance min­is­ters from smaller EU states raised con­cerns about the eco­nomic im­pact.

France is push­ing for a new way of taxing on­line giants on the ba­sis of their turnover, rather than their prof­its, to in­crease tax rev­enues from com­pa­nies such as Google or Face­book, which are ac­cused of pay­ing too lit­tle in Europe.

It has gath­ered the sup­port of about a third of the 28 EU gov­ern­ments but would need the back­ing of all mem­ber states to re­duce risks of le­gal chal­lenges.

“We should be very care­ful,” Den­mark’s Fi­nance Min­is­ter Kris­tian Jensen said, warn­ing of the risks of push­ing in­no­va­tive com­pa­nies away from Europe.

Speak­ing on his ar­rival at a meet­ing of EU fi­nance min­is­ters in Es­to­nia, which will fo­cus on tax­a­tion of the dig­i­tal econ­omy, he said that he was “al­ways skep­ti­cal of new taxes.”

His re­marks were echoed by Lux­em­bourg’s Fi­nance Min­is­ter Pierre Gramegna, who ac­knowl­edged there was an is­sue with on­line giants’ tax­a­tion, but said a tax on turnover would hit loss­mak­ing com­pa­nies which are oth­er­wise ex­empted from pay­ing.

He said any EU so­lu­tion would need to be backed at global level to avoid af­fect­ing Europe’s com­pet­i­tive­ness. “It does not make any sense” for Europe to move with­out a global agree­ment, he said.

The Czech Repub­lic and Malta both said tech­ni­cal work on a turnover tax would be very com­pli­cated.

Es­to­nia, which holds the EU’s ro­tat­ing pres­i­dency, pushed an al­ter­na­tive plan to tax com­pa­nies where they have a dig­i­tal, and not only phys­i­cal, pres­ence in a coun­try.

Es­to­nia’s Fi­nance Min­is­ter, Toomas Ton­iste, said a global so­lu­tion “would be the best.”

Other EU mem­ber states were more sup­port­ive, with Dutch Fi­nance Min­is­ter Jeroen Di­js­sel­bloem call­ing France’s plan “a very good ini­tia­tive.”

Bel­gium also backed it, though Fi­nance Min­is­ter Jo­han Van Overtveldt said tech­ni­cal work was nec­es­sary. Ger­many has al­ready come out in sup­port.

France’s Fi­nance Min­is­ter Bruno Le Maire urged the EU Com­mis­sion, which is in charge of mak­ing leg­isla­tive pro­pos­als, to come up with a for­mal text by mid 2018.

The Com­mis­sion will set out the pos­si­ble le­gal op­tions in the com­ing days, be­fore a sum­mit of EU lead­ers on Sept. 29 ded­i­cated to dig­i­tal is­sues.

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