Collection of EU states back new plan to tax digital giants
Finance ministers from ten EU countries have signed a letter, pledging to throw their weight behind a new initiative to begin taxing the digital revenues of the major internet players such as Google, Amazon and Facebook. Triggered initially by France, the tax plan has gathered support from a significant cohort of additional EU states such as Germany, Spain, Italy, Portugal and several others.
Such internet giants have often been accused of paying minimal taxes and the issue has been gaining increased attention at EU level in the past few years. If the plan were to materialise, it would see the tech firms paying a tax on revenues in any country where they do business rather than being taxed on profits where they currently report. The signatories of the letter urged the EU commission to explore ‘’EU law compatible options’’ for establishing an ‘’equalisation tax’’ based on ‘’turnover generated in Europe by the digital companies’’.
The debate over the issue will be continued later this year in December but already it faces somewhat stiff resistance, particularly from smaller low-tax EU countries such as Ireland and the Netherlands. Although many of these states have already moved to close some of the most aggressive local tax loopholes, it has not halted the effort by these ten countries to push for greater tax plans for the digital internet giants.
ECB officials divided over end-date over QE programme
Reports emerging this week have indicated that policymakers in the European Central Bank disagree on whether to set a firm end-date for their massive money-printing programme. Planning to meet next month, officials in Frankfurt are split between ‘hawks’ of the richer northern countries in the EU who favour tapering off the €2.3 trillion bond-purchase programme and those ‘doves’ who edge towards holding on to the current pace.
The divisions have emerged due to a stubbornly strong euro which is dampening the effect on inflation within the Union. Hawks within the central bank view the strength of the euro currency as signs of the euro zone’s strong economic growth, while doves believe it reflects weakness in the US and the UK. Such a rift means that it is likely a compromise solution, whereby no firm date is agreed, will be reached on October 26th when policymakers meet, effectively putting off the decision until the next meeting in December.
Friday 29th September – EU Digital Summit (Tallinn, Estonia)
Compliments of Vulcan Consulting, a member of the EACCNY