Friday, 16 March 2018 11:14

Google, Facebook face 3% turnover tax in EU: report Featured


Multinational US technology companies like Google and Facebook will have to pay a 3% turnover tax in the EU, according to a draft proposal from the European Commission.

Reuters reported that it had seen the proposal which is set to be adopted next week, adding that it updated an earlier draft that had contemplated a rate of between 1% and 5%.

The proposal will need the backing of EU states and lawmakers and will be applicable to big companies which have global annual revenue above 750 million and annual taxable revenue above 50 million in the EU.

Earlier this month, French economy minister Bruno Le Maire said the bloc had plans to tax big multinational technology companies between 2% and 6% of their revenue, with the figure being closer to the lower end.

The move to tax revenue and not profits was mooted last September, during a meeting of EU finance ministers in the Estonian capital, Tallinn.

Complaints have been frequently voiced in countries around the globe that big American multinationals are siphoning off their profits to other low-tax havens like Ireland and Luxembourg.

In September last year, EU socialist lawmaker Paul Tang presented a report to the finance ministers' meeting on tax reform, saying that digital multinational companies "minimise the overall tax burden in the EU by routing all revenues to low-tax member states such as Ireland and Luxembourg".

Similar complaints have been voiced in countries outside the EU, including Australia. Multinational tech companies, including Apple and Microsoft, have faced questioning in the Australian Senate over tax minimisation.

Initially, the EU set the threshold at 10 million but raised it in order to exempt smaller companies and start-ups.

Reuters said: "Services that will be taxed are digital advertising, which would capture both providers of users’ data like Google, and companies offering ad space on their websites, like popular social media such as Facebook.

"The tax would be also be levied on online platforms offering 'intermediation services', a concept under which the Commission includes gig economy firms such as Airbnb and Uber. Digital market places, including Amazon, would also be within the scope of the levy."

The companies would be taxed in the EU country where their users are based. If their users are spread over numerous countries, then the tax would be shared over these nations.

All 28 EU countries need to approve any tax measure for it to become law.

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Sam Varghese

Sam Varghese has been writing for iTWire since 2006, a year after the site came into existence. For nearly a decade thereafter, he wrote mostly about free and open source software, based on his own use of this genre of software. Since May 2016, he has been writing across many areas of technology. He has been a journalist for nearly 40 years in India (Indian Express and Deccan Herald), the UAE (Khaleej Times) and Australia (Daily Commercial News (now defunct) and The Age). His personal blog is titled Irregular Expression.

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