At G20 Meeting, Europeans Push Enactment of a Digital Tax

At a meeting in Argentina of G20 finance ministers and central bankers, the Europeans pushed to advance global rules to tax the digital economy, contrary to the point of view of the U.S. delegation. The group’s final communiqué reiterated the body’s commitment to “address the impacts of the shift to a digital economy on the international tax system by 2020,” but gave no further details. Earlier this year, the European Commission proposed rules to make digital companies such as Amazon, Facebook and Google pay more taxes.

Reuters reports that, “some 200 companies would fall within the scope of the new tax, European officials said at the time, estimating additional annual revenues of about 5 billion euros ($6 billion).”

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European commissioner for economic and financial affairs Pierre Moscovici, who stated that tech behemoths should “pay their fair share of tax,” added that a turnover tax, to be adopted before the end of 2018, would be a good “interim solution.” A senior European official also said that the “fair taxation of digital giants” is a way to show European unity and strength during a time that the EU leaders feel pressured by President Donald Trump.

“We cannot accept that our SMEs (small and medium enterprises) have a level of taxation 40 points higher than the level of taxation of Internet giants,” said that official.

Earlier this year, U.S. Treasury Secretary Steve Mnuchin stated that he, “firmly opposes proposals by any country to single out digital companies.” European Council representative to the G20 Hubert Fuchs noted that, “taxation of the digital economy is mostly of course a taxation of American companies — because they are the key players in the world — so the United States feel that this is an attack concerning their digital economy, which it isn’t really.”

Some EU members did voice “concerns their companies could be affected by such a tax and international partners may respond with retaliatory measures.”

Australia Treasurer Scott Morrison said the G20 meetings established a key problem: “that ‘no one knows’ how to measure for tax purposes the value of the data users of social media services like Facebook create outside of the countries where those companies are based.” He also was skeptical that the interim measure — which he called a “sales tax on digital advertising” — would be efficacious.