PublishedDecember 4, 2018

New EU Digital Tax Proposal Raises New Concerns, Broad Support for Global Reform

Brussels, BELGIUM — European Finance Ministers were unable to decide on the EU Digital Services tax (DST) proposal at today’s Economic and Financial Affairs Council meeting due to a last-minute French-German compromise text. The new text would limit the tax to advertisement activities and would allow Member States to introduce a broader tax base in national implementing laws. If an international solution has been agreed and implemented into EU law before 1st January 2021, the implementation of the EU directive would be withdrawn.

A number of European Finance Ministers expressed concerns with the new text, either out of principle, or because administrative costs could outweigh the more narrow tax income.

The Commission and Members States expressed a preference for and confidence in achieving a global solution. G20 leaders this weekend declared that they will work to reach a consensus based solution by 2020. The OECD, which leads these global efforts, reported “significant progress” in its report to G20 leaders last week.

The Computer & Communications Industry Association supports this work to achieve a global consensus on international tax reform. We agree with the OECD that “there is no consensus on either the merit or need for interim measures” which will likely have a “negative impact on the overall welfare of an economy.” “We worry that the cost of the DST would ultimately be passed on to European businesses and ultimately hurt Europe’s digitising economy.

The following can be attributed to CCIA Europe’s Vice President, Christian Borggreen:

“It is encouraging that Ministers have decided to think again about the proposed EU digital tax, which risks harming Europe’s digitising economy. We believe a global solution through the OECD, that also includes Europe’s main trading partners, is the best way forward.”

For media inquiries, please contact Heather Greenfield [email protected]

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