France, Germany Support EU Digital Tax On Tech Giants

The European Union looks set to follow the British lead with reports suggesting that it will introduce a so called “digital tax” before Christmas.

Last month United Kingdom became one of the first major economies to impose a ‘digital tax’ on tech firms such as Amazon, Facebook, and Google, to ensure they pay their fair share of tax.

The measure was revealed in the chancellor Philip Hammond’s Budget 2018, and came after years of complaints that American tech giants pay too little tax in certain European countries.

Digital Tax

A tech tax has been considered by the European Commission for a while now.

In March this year the EU unveiled its proposals in an effort to get leading (and mostly American) technology companies to pay more tax.

And now French Finance Minister Bruno Le Maire was quoted by Reuters as saying on Monday that a European Union digital tax law was close to being struck.

“We are close to having a deal in our hands,” Le Maire told France Inter radio. He said he was confident the German government would help France reach an agreement with other member states.

And it seems that the other European powerhouse Germany is on board with the idea, despite it recently calling for a revision of the plan.

German Finance Minister Olaf Scholz was also quoted by Reuters as saying he favours getting a binding deal on a European Union digital tax at a meeting of EU finance ministers in December and that he supported the French model.

“If the negotiations continue the way that they have been going, we’ll still be in talks in 100 years. That is why I support the French model and want to offer the proceeds to the EU,” news weekly Der Spiegel quoted Scholz on Monday as saying.

British lead

The British are setting their digital tax rate at 2 percent on the revenues of business carried out with UK-based users. It is believed this digital tax will raise £1.5bn over four years.

This 2 percent differs to the 2 to 6 percent of turnover tax that had been mooted previously by the French economy minister.

The European Commission meanwhile is said to be seeking a rate of 3 percent.

However, it is worth noting that the EU measure will require the support of all 28 EU states.

Low-tax countries such as Ireland oppose the plan, especially as Ireland has benefited by allowing multinationals to book profits there on digital sales to customers elsewhere.

Tech companies for their part have always defended their low-paying tax structures in Europe, and insist they abide by tax laws as they’re currently written.

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