EU plans to raise tax bill of online giants
gather momentum
Nearly one third of European Union states backed a plan to tax digital
multinationals on their turnover, France said on Friday, as the EU weighs a
range of other measures to increase the tax bill of companies like Google and
Amazon.
European Economic and Financial Affairs Commissioner Pierre Moscovici
gestures during his meeting with Greek Prime Minister Alexis Tsipras (not
pictured) at Maximos Mansion in Athens, Greece, July 25, 2017. REUTERS/Alkis
Konstantinidis/Files
TALLINN: Nearly
one third of European Union states backed a plan to tax digital multinationals
on their turnover, France said on Friday, as the EU weighs a range of other
measures to increase the tax bill of companies like Google and Amazon.
The moves are
part of a growing campaign in the EU to claim tax revenues that online giants
are accused of skirting by routing most of their profits to low tax rate
states, like Ireland and Luxembourg.
"The
digital economy should be taxed as the rest of the economy," the EU
commissioner for taxation, Pierre Moscovici, told reporters upon his arrival on
Friday to a meeting of euro zone and EU finance ministers in Tallinn, the
Estonian capital.
A report
published on Thursday by influential EU lawmaker Paul Tang estimated that
Google, which has its EU tax residence in Ireland, paid taxes not higher than
0.8 percent of its EU revenues between 2013 and 2015.
Facebook, also
based in Ireland, had a ratio as little as 0.1 percent in the same period,
while Luxembourg-based Amazon paid almost nothing as it reported nearly no
profits.
Facebook and
Google were not immediately available to comment on the proposals when
contacted by Reuters.
COMPETING PLANS
Most of the 28
EU states agree in principle with more effective taxation of digital companies,
but differences remain on how to move forward.
A plan proposed
by France to tax large digital corporations on their turnover, rather than on
their profits, is gaining supporters, although still needs technical work.
France's
Finance Minister Bruno Le Maire told a news conference on Friday that a total
of nine countries "formally joined the initiative". In addition to
France, they are Germany, Italy, Spain, Austria, Bulgaria, Greece, Slovenia and
Latvia.
A tax on
turnover would raise revenues also from companies, like Amazon, that do not
report profits, and would be likely applied quickly, a European official said.
However, it
would need to be made compliant with EU internal market rules. States could
also apply it unilaterally, but that would expose them to a higher chance of
legal challenges, the official said.
Opposition from
smaller states would need to be overcome, as countries like Ireland and
Luxembourg may lose tax revenues from the new framework.
Tax reforms in
the EU need unanimity among EU states, a factor that has blocked many overhauls
in the past.
Estonia, who
holds the EU rotating presidency, is pushing for a more structural approach. It
wants the EU to agree that a company could be taxed when it is
"virtually" present in a country, through a digital platform for
instance.
At the moment,
businesses are taxed only in countries where they have a concrete presence,
such as a plant.
This change
could be introduced in a review of EU rules on the tax base that are under
discussion in the Parliament and among EU states. Tang plans to submit an
amendment going in that direction.
The European
Commission, the EU's executive, said it will present in the coming days a
document listing several options for moving forward.
A Commission
official said the document could propose five or six possible measures,
including the French and the Estonian plans. He warned against risks of
diverging taxation in EU states and insisted a compromise on a common set of
rules should be the objective.
The document
will be ready for a summit of EU leaders dedicated to digital issues that will
be held in Tallinn on Sept. 29, Moscovici said.
(Reporting by
Francesco Guarascio @fraguarascio, editing by Robin Emmott)
REVIEW
This is based on my friend’s review, Syalvia Syahya
As a person who used digital
platform regularly, it actually surprising that many of us still do not know
that the digital platform still hadn’t have taxes as it should be. Its actually
not more than 0.8 percent of the companies revenues!
Stated on the article that EU plans to raise tax bills of online platform such as Google and Facebook, that are accused of skirting by directing most of their profit to low tax rate states, like Ireland and Luxembourg. In their origin country, such as United States or United Kingdom, the companies admit for not having permanent office so that they can move the revenue to other country. Because of that, no wonder that 28 EU states (one third of EU) agree in principle with more effective taxation of digital companies.
France, along with 9 other countries are agree to tax large digital corporations on their income rather than on their profits. It would gained more revenues from companies that do not report profits like Amazon. Beside that, Estonia want to tax the company that present on the country, whether its real company that have an office or factory, or online shaped company. Hence, the plans still needs a lot of preparation. It have to be in line with EU’s tax rules and approved by all the EU states.
Precisely, I am agree with both of the plans. EU should immediately set the rules to increase tax from online platform. Because its basically a same business that earned same profit like usual business, and it should be billions dollars or more every month as internet users increase fast, but they avoid to pay taxes, which is unfortunately decrease state’s revenues. From what I read on others literature, the companies itself do a lot of things that make them not paying taxes legally. Google, for example, it has 5 main office in UK, but it put the taxes on Bermuda which applying 0 percent of income tax. A clever way to keep the taxes low, but also unfair, reminding the amount of people uses the platform. Google, Facebook, Amazon was the biggest among their competitor. Google are the most famous search engine website, Facebook are well knowing for its 1.8 billions users all over the world, and who do not know Amazon, the most common used e-commerce? The users are spread globally, yet access the internet more than 4 hours each day. Thus, make the France and Estonia plans are applicable to all state the companies expanded the business—it almost all the country.
We all know that it is a world problem, not on the certain states. Even Indonesia also go through this problem, yet still didn’t solved clearly. The miss of tax collection for developing country like us can take much effect to public welfare. I hope the plans that EU has discussed can get through the authority and prompted the tax regulation on other countries, include Indonesia. I think its all, and thank you for your attention
Stated on the article that EU plans to raise tax bills of online platform such as Google and Facebook, that are accused of skirting by directing most of their profit to low tax rate states, like Ireland and Luxembourg. In their origin country, such as United States or United Kingdom, the companies admit for not having permanent office so that they can move the revenue to other country. Because of that, no wonder that 28 EU states (one third of EU) agree in principle with more effective taxation of digital companies.
France, along with 9 other countries are agree to tax large digital corporations on their income rather than on their profits. It would gained more revenues from companies that do not report profits like Amazon. Beside that, Estonia want to tax the company that present on the country, whether its real company that have an office or factory, or online shaped company. Hence, the plans still needs a lot of preparation. It have to be in line with EU’s tax rules and approved by all the EU states.
Precisely, I am agree with both of the plans. EU should immediately set the rules to increase tax from online platform. Because its basically a same business that earned same profit like usual business, and it should be billions dollars or more every month as internet users increase fast, but they avoid to pay taxes, which is unfortunately decrease state’s revenues. From what I read on others literature, the companies itself do a lot of things that make them not paying taxes legally. Google, for example, it has 5 main office in UK, but it put the taxes on Bermuda which applying 0 percent of income tax. A clever way to keep the taxes low, but also unfair, reminding the amount of people uses the platform. Google, Facebook, Amazon was the biggest among their competitor. Google are the most famous search engine website, Facebook are well knowing for its 1.8 billions users all over the world, and who do not know Amazon, the most common used e-commerce? The users are spread globally, yet access the internet more than 4 hours each day. Thus, make the France and Estonia plans are applicable to all state the companies expanded the business—it almost all the country.
We all know that it is a world problem, not on the certain states. Even Indonesia also go through this problem, yet still didn’t solved clearly. The miss of tax collection for developing country like us can take much effect to public welfare. I hope the plans that EU has discussed can get through the authority and prompted the tax regulation on other countries, include Indonesia. I think its all, and thank you for your attention
An this is my comment about
Syalvia’s review :
Hi, Shalvia! I’m Erfin. And I’d like to leave a
comment about your amazing review!
When I see all comments
from our friends,
once I see your review, I immediately want to read it. Because you make a kinds of
opening before entering
on summary. How
amazing you are! If the
others
instantly write the summary of the text firstly, but you are not! You give the
introduction first. Good job, Shalvia!
In the fourth paragraph, where you state your
arguments, I feel like ‘Wow. It is very complete.’ You add some informations
that not mentioned in the text. And that’s really helping us to understand more
about the topic being discussed in the article. You’re such a dilligent girl!
You search on other literature that the companies do a lot of things that make
them not paying taxes legally. You even inform that Google has 5 main office in
the UK, and Google put the taxes in Bermuda which applying 0 percent of the
income tax. Woah! You give me lots of information I’ve never read before!
And I’m 100 percents agree with your last statement. I
do hope the plans that EU has discussed can run successfully and get trough the
authority. So that our beloved country, Indonesia will apply the same thing.
Because as we know, Indonesia has problems similar to what happen in EU.
I think enough. I’m sorry for any mistakes and thank
you very much for adding some informations from other sources! Have a good day!
This is our English task in our first semester in the college.
I hope it can be helpful.
Thanks.
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