EU ‘very close’ to digital tax agreement

Strasbourg – EU member states are “very close” to an agreement on a controversial digital tax on internet giants, French Finance Minister Bruno Le Maire has said.

Speaking at the European Parliament, Le Maire reiterated his case for digital firms to pay more. He and other proponents argue digital companies make huge profits in the European Union but pay far less in taxes than traditional firms.

He called this tax disparity “unjust” and “unacceptable.”

Little or no tax at all

The European Commission has estimated that traditional companies typically pay a tax of 23 per cent on profits – compared to 8 to 9 per cent for internet firms. Some companies pay little or no tax at all.

The commission has proposed an interim tax of 3 per cent on revenue for all digital firms posting annual sales of at least 750 million euros (862.5 billion dollars), or online sales of at least 50 million in Europe.

The proposal is intended to capture at least some tax from digital companies while the Organisation for Economic Cooperation and Development works on a long-term global framework.

Some countries, such as Ireland, have been sceptical of the tax on the grounds that it could hurt competitiveness.

Sunset clause

In September, after a meeting of EU finance ministers, German Finance Minister Olaf Scholz said members were “optimistic” on progress, and that states could reach agreement by December. The deal might contain a sunset clause so that it would be overruled if a global measure follows, as Le Maire has suggested.

Generally, EU-wide tax decisions require unanimity among the bloc’s 28 member states.