Germany, France, Italy and Spain’s finance ministers have announced plans to tax tech multinationals, such as Amazon and Alphabet Inc./Google, based on their local revenue rather than their local profits.
According to The Street, although there was no specific tax rate given, the funds raised through the tax “would aim to reflect some of what these companies should be paying” in corporate taxes based on net income.
They would like the EU to develop a region-wide plan to implement their proposal, and plan to present it to all 28 EU finance ministers at a meeting next week.
This news is just the latest sign that European politicians and regulators are uncomfortable with the growing strength of U.S. tech giants in their countries. Last year, the European Commission ruled that Apple owed $14.5 billion in back taxes plus interest for “undue tax benefits” obtained from the Irish government from 2003 to 2014. Apple is appealing the ruling.
It hasn’t been all bad news, though. In July, Google won a tax ruling from a French court, which found that Google isn’t liable for $1.3 billion in taxes on profits sent to an Irish subsidiary, since it doesn’t have a permanent base in France. And last week, Intel won a court ruling that sent a 2009 EU antitrust decision back to a lower court to be re-examined. The company was fined for what the Commission said was an abuse of its top position in the market for computer chips.
This new proposal might receive some opposition from U.S. politicians, especially because of the amount of taxes in play. Google recorded $16.6 billion in revenue from the EMEA region during the first half of 2017, and could do over $35 billion in local sales this year. That means a 10 percent tax would amount to $3.5 billion in payments, while a 15 percent tax would require $5.25 billion in revenue tax.