The European Commission is looking to tax digital firms’ revenues, eyeing where their users are based – not where the firms themselves base their headquarters.
Such a plan, Reuters reported on Monday (Feb. 26), would have the impact of taxing those companies’ revenues at a rate that could range between 1 percent to 5 percent.
The newswire cited a draft of a document from the Commission, which formed the basis for the Monday report. The tax would boost the amounts paid by firms as far-flung as Amazon and Facebook, which in turn have been charged by the EU with not paying enough in taxes. That’s tied to moving profits gleaned from the EU to countries where taxes are relatively lower, such as Ireland.
According to Reuters, the document recommends that taxes be levied on firms that have top lines above 750 million euros and with digital sales in the EU of at least 10 million euros annually. The digital classification would also extend to companies like Google that sell online ads. Twitter and Instagram would also be subject to the tax, as would firms that provide digital marketplaces, such as Amazon. Taxation of online advertisers should be applied “where the advertisement is displayed” and “where the users having supplied the data which is being sold are located,” stated the document.
As for online shopping, the tax would be collected in jurisdictions where “the user paying for being able to access the platform (or to conclude a transaction within the platform) is located,” according to the document. Online media would be exempt, said Reuters.
The proposal may possibly be changed before publication, slated for the second half of the year.