Europe Dig­i­tal Tax in doubt as Malta ques­tions year-end dead­line

• EU fi­nance min­is­ters dis­cussed dig­i­tal tax plans over week­end • Coun­tries in­clud­ing France, Aus­tria seek deal by end of year

The Malta Business Weekly - - FRONT PAGE -

Malta’s fi­nance chief poured cold wa­ter over Euro­pean ef­forts to strike a deal on tax­ing dig­i­tal com­pa­nies by the end of the year, say­ing such a levy should be agreed at a global level Nour Al Ali and Vik­to­ria Den­dri­nou wrote on Bloomberg.

Fi­nance Min­is­ter Ed­ward Sci­cluna said in an in­ter­view with Bloomberg that the com­plex­ity of a tax on tech gi­ants re­quires time to ad­dress and would be best dealt with at an in­ter­na­tional, mul­ti­lat­eral body in the same way as other world­wide cor­po­rate tax rules.

“Why do we want to rush,” he said, adding that he doubts a deal could be struck by the end of the year.

His com­ments come af­ter Euro­pean Union fi­nance min­is­ters held talks over the week­end on a pro­posal aimed at en­sur­ing tech­nol­ogy gi­ants pay their fair share in tax, amid grow­ing pub­lic anger that cor­po­ra­tions ben­e­fit from an out­dated frame­work that strug­gles to deal with on­line busi­nesses.

They un­der­score the re­sis­tance among cer­tain na­tions, who would rather wait for an in­ter­na­tional ap­proach rather than a quick EU-only fix.

Trade ten­sions

Coun­tries led by France are push­ing for a rapid in­tro­duc­tion of an EU tax on rev­enues of large tech firms such as Ama­zon.com Inc. and Face­book Inc. un­til the world’s wealth­i­est na­tions can agree on a global sys­tem. French Fi­nance Min­is­ter Bruno Le Maire has been rais­ing pres­sure on his Euro­pean peers to move ahead with the levy, warn­ing that vot­ers would pun­ish them at EU elec­tions in May if they don’t act. Euro­peans can’t un­der­stand why tech gi­ants pay lower tax rates than small com­pa­nies based on Euro­pean soil, he said.

But other na­tions are wor­ried push­ing ahead with such a tax -- which would tar­get some of the big­gest US com­pa­nies -- could ex­ac­er­bate trans-At­lantic trade ten­sions. Ger­many, which ex­ports more to the US than any other EU coun­try, may stand to lose the most in the case of an es­ca­lat­ing trade war.

Sci­cluna echoed these con­cerns, say­ing that the dig­i­tal pro­posal could com­pli­cate mat­ters po­lit­i­cally be­tween the EU and the US, “ex­ac­er­bat­ing the is­sue of the trade war.”

“This is not just Ire­land or Lux­em­bourg or Malta,” he said. “Half of the coun­cil, es­pe­cially the north­ern coun­tries, un­der­stand that it’s fool­ish to go for a quick fix tax in a com­pli­cated area like that.”

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