EU Will Not Implement Digital Tax, Agrees To Internet Tax Reform

The European Union has announced that it will not move forward with a digital tax plan covering the entire EU, but also said it would look at reforming tax laws for internet companies, according to a report from Reuters.

Finance ministers will work together on the reform. Under the original proposed digital tax, companies like Google and Facebook could have potentially faced a 3 percent tax hit.

“A number of delegations continue to have fundamental objections,” the Romanian presidency of the EU wrote in advance of the March 12 finance ministers meeting.

The global tax reform is being prepared by the Organisation for Economic Co-operation and Development (OECD). It has been difficult to coordinate tax reform in the EU because there are many varying national interests.

Several EU states blocked the original digital tax plan due to fears of a loss of revenue and potential repercussions from the United States and other affected countries. The plan would force big companies to pay a tax on data sales, online marketplaces and targeted ads.

For the measure to pass, it would have to be approved by all 28 member states. Ireland and Scandinavian countries fiercely opposed the plan, and some other countries were trepidatious. Some countries, like France, Italy and Spain, have introduced digital taxes in their own countries.

France announced on Wednesday (March 6) that it was going after U.S.-based internet companies by introducing a digital tax that will impact companies including Google, Facebook and Amazon. According to a report in CNBC, France’s finance minister announced the 3 percent tax, saying it will apply to about 30 big companies, mainly from the U.S. While that tax is tiny compared to the revenues of those large U.S. companies, it is expected to yield France $565 million each year, and could open the floodgates for legislation of internet companies in other European countries.