Taxing Times for Tech
Following Chancellor Philip Hammond’s announcement of a UK digital services tax in the Autumn Budget last month, the introduction of an EU technology tax looks more likely than ever.
The French Finance Minister, Bruno Le Maire, indicated in a radio interview that the European Commission was close to agreeing a 3% levy for multinational technology companies.
Like the UK tax, the measure will be targeted at the big names in the sector, limited to those who earn over a certain amount in annual global revenues. Philip Hammond noted that his introduction of a 2% levy on companies including search engines, social networks and online marketplaces would be a stopgap until international standards were agreed.
The tax proposed by the European Commission will raise an estimated £4.4bn across the member states, though it is unclear how Brexit may affect the UK’s undertaking of the new rules.
Despite hopes that the EU tax may be agreed by Christmas, several countries have opposed the plans amid fears of lost revenue from technology companies that set up their European headquarters in tax-friendly nations. Ireland, the Czech Republic, Sweden and Finland have all raised concerns.
The Organisation for Economic Cooperation and Development (OECD) is also thought to be working on an international solution.