Stalemate sees EU end digital tax plan

EUROPEAN UNION governments on Tuesday scrapped a plan to introduce an EU-wide digital tax as some states opposed it, the Romanian presidency of the EU said.

The move is likely to be welcomed by digital giants such as Google and Facebook who would have fallen under the scope of the envisaged 3 per cent levy.

However, they face similar taxes that EU states, such as France, Italy, Britain and Spain, are introducing at national level.

Speaking in a public session of a meeting of EU finance ministers, Romania’s Eugen Teodorovici said there was no agreement on the tax despite months of talks, as the bloc’s Nordic countries and Ireland kept opposing the reform.

He said ministers would now focus on trying to reach a common position for an overhaul of digital taxation at a global level by 2020.

Global reforms on tax matters have proven very hard to reach because of widely differing interests among top states.

The Organization for Economic Co-operation and Development is working on a global reform of digital taxation to narrow loopholes that allow multinational firms to greatly cut their tax bills.

The EU will reopen its debate on possible tax measures in the bloc if the OECD’s planned reform is delayed, Teodorovici said.