EU UNVEILS NEW DIGITAL TAX PLAN

Proposal set to affect revenue from digital advertising, paid subscriptions and selling of personal data

THE European Union unveiled yesterday proposals for a digital tax that targets United States tech giants, heaping more problems on Facebook after revelations over misused data of 50 million users shocked the world.

The special tax is the latest measure by the EU to rein in US tech giants and could further embitter the bad-tempered trade row pitting the EU against US President Donald Trump.

EU Economic Affairs Commissioner Pierre Moscovici presented his proposals aimed at recovering billions of euros from mainly US multinationals that shift earnings around Europe to pay lower tax rates.

Moscovici insisted it was “not an anti-GAFA tax nor an anti-US tax”, referring to the popular acronym for Google, Apple, Facebook and Amazon.

The transatlantic blow has been championed by French President Emmanuel Macron and will be discussed over dinner at an EU leaders summit today.

The unprecedented tech tax follows major anti-trust decisions by the EU that have cost Apple and Google billions and also caught out Amazon.

The EU tax would affect revenue from digital advertising, paid subscriptions and from “sale of data generated from user-provided information”, said the European Commission .

The EU tax plan will target mainly US firms with worldwide annual turnover above €750 million (RM3.62 billion), such as Facebook, Google, Twitter, Airbnb and Uber.

Spared are smaller European start-ups that struggle to compete with them.

Brussels is seeking to choke tax-avoidance strategies used by the tech giants that, although legal, deprive EU governments of billions of euros in revenue

The European Commission estimates that digital businesses pay an average effective tax rate of just 9.5 per cent, compared with the 23.3 per cent paid by traditional companies.

These numbers are disputed by the tech giants, which have criticised the tax as a “populist and flawed proposal.”