The Malta Independent 15 December 2017, Friday

EU states expected to find preliminary deal on digital tax on 6 December

Friday, 24 November 2017, 14:55 Last update: about 21 days ago

Some EU states, including Malta, are resisting EU plans to raise the tax of multinational technology companies, Reuters reports.

A preliminary deal by European Finance Ministers is expected to be reached when they next meet on 6 December, the international news agency said.

Reuters reported yesterday how bigger member states were pushing for this move after accusing international firms like Google and Apple of reducing tax bills by sending their EU profits to low-tax countries. The report also reads that France has called for an "equalisation tax", on digital company turnover.

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Reuters reports that EU diplomats are toning down the proposal, as the more recent draft proposal focuses on the preference for a global solution. Reuters states that such global deals are extremely difficult to achieve, and that linking such reforms in the EU to a global deal would result in an indefinite postponement.

Last September, this newsroom reported that EU efforts to impose heavier taxes on Google, Amazon and other tech giants are gathering momentum, even as some countries including Malta had expressed misgivings about a French plan to target their turnover.

Last September, this newsroom reported that "France had built a growing coalition of support for its plan for a new EU law that would allow governments to impose a levy on internet giants' revenues as an alternative to a traditional corporation tax on profits. A total of 10 countries have (at that time) signed a letter backing the scheme, including Germany, Spain, Italy, and Portugal, while several others indicated support at a meeting of EU finance ministers in Tallinn."

At a Pre-Budget business breakfast last September, Finance Minister Edward Scicluna reported about the developments happening within the European circles, namely within ECOFIN, whereby France and nine other countries, were pushing their agenda to introduce a quick fix measure whereby businesses operating in the digital economy, will be charged a corporate tax based on turnover rather than on profits generated from that activity.

Minister Scicluna had stated what he said, in his intervention on the same subject matter during the ECOFIN meeting of EU Ministers held in Tallinn, Estonia, that "given the global aspect of digitalisation of our economies and the work that is already being carried out within the OECD on this matter, we are of the view, that any action emanating from the EU should be directed at reinforcing the said work that is being carried out by the OECD.  So called "quick fix" solutions taken on a unilateral EU basis should be avoided, particularly where this could end up damaging EU companies. In view of this,  EU solutions in this area should apply on a broader scale, and if solutions are found, then these should serve as input into OECD global discussions."

Scicluna was reported in other media as having had said that if this proposal is implemented within the EU, companies offering online services established in EU states might end up being taxed more than once on the same business, once profits go through the applicable tax system, and another time through the proposed system on their turnover. Such a situation could render the EU less competitive, he had said.


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