WASHING TON: Large companies with significant digital revenues in the European Union such as Google and Facebook could face a 3 percent tax on their turnover under a draft proposal by the European Commission seen by Reuters. The proposal, expected to be adopted next week and still subject to changes, updates an earlier draft which envisaged a tax rate of between 1 and 5 percent.
Large U.S. firms such as Uber, Airbnb and Amazon could also be hit by the new levy, which would apply across the 28 EU countries.
Big tech firms have been accused by large EU states of paying too little tax in the bloc by re-routing some of their profits to low-tax member states like Ireland and Luxembourg.
Taxing revenues is the wrong approach to addressing some legitimate questions regarding cross-border tax policies,” Josh Kallmer, senior vice president at the U.S.-based Information Technology Industry Council, which represents Google, Facebook, Amazon and other tech firms, told Reuters in an emailed statement.
Online media, streaming services like Netflix and other providers of digital content which do not rely on users to create value will be excluded from the scope of the levy.
The tax is presented in the draft as a temporary measure that would only be implemented if no deal is found on a more comprehensive, and possibly global, solution to tax the digital profits of companies in the countries where they are made, rather than where the firms are headquartered as is the case now.
