European Tax on Digital Giants Faces Resistance Led by Ireland
European Tax on Digital Giants Faces Resistance Led by
Ireland
Ill-fated financial transaction tax underlines challenge
France’s Le Maire says he’s ready to meet with skeptics
By Mark Deen and
Viktoria Dendrinou September 16, 2017, 4:22 AM PDT
France’s campaign to institute a new levy for digital
companies such as Amazon.com Inc. and Facebook Inc. ran into early difficulties
as the European Union seeks to align its tax policy with more modern and
technologically focused businesses.
French Finance Minister Bruno Le Maire told colleagues at
a meeting in Tallinn, Estonia, that the bloc should agree to a tax on the
digital industry by mid-2018 as a matter of fairness. Ten countries, including
Germany, Italy and Spain, have formally backed the initiative. Eight others
have reservations, he said, led by Ireland.
“The very, very considerable difficulties in taxation of
this sector” became clear at this meeting, Irish Finance Minister Paschal
Donohoe told reporters on Saturday, explaining that any such levy should
include the U.S. and other Group of 20 countries. Ireland joined other nations
in raising “very big questions about how such a measure could be implemented,”
he said.
Traditional taxation practices have failed to capture
business from an industry where value added tends to be virtual rather than
material and digital companies have sought to take advantage of loopholes
created by uncoordinated European regulation. Yet the opposition matters
because the EU requires unanimity among its 28 members to implement tax
policies.
International Rules
France has proposed a temporary levy on revenue because
taxing profits is complicated under international rules. Implementation of a
new policy would take years, meaning it could be a while before any money was
actually raised.
Denmark and Luxembourg were among the countries that
urged the EU to proceed with caution. Malta raised the specter of the financial
transaction tax, which various French governments have been lobbying for since
the financial crisis, without tangible results.
“I hope it’s not another financial transaction tax,”
Maltese Finance Minister Edward Scicluna said. “One has to look at it globally
rather than partially, because it involves the U.S., it involves China.”
Danish Finance Minister Kristian Jensen warned that a
European tax could risk driving business abroad. “I’m always skeptical about
new taxes and I think that Europe is taxed heavily enough,” he said. The
digital industry is “the future,” he added.
Temporary Fix
Austrian Finance Minister Hans Joerg Schelling proposed
that current discussions only apply to a temporary solution before passing that
outline on to the Organization for Economic Cooperation and Development, a
group that advises its 35 members on policy, for a more comprehensive fix.
Le Maire invoked the EU’s need to counter anti-European
political movements in his campaign for the tax, calling to mind French
President Emmanuel Macron’s hard-fought election victory over populist Marine
Le Pen in May as a reason to accept the reform.
Le Maire said he is prepared to travel to Dublin and
other European capitals to discuss the issue. The topic will be discussed at
the next meeting of EU finance ministers in Luxembourg in October and the group
should be ready to make a formal proposal by December, he said.
“I’m not looking for confrontation,” Le Maire told
journalists after the meeting. “I’m convinced we’ll find a solution.”
— With assistance by Paul Gordon, Rainer Buergin, Ott
Ummelas, Radoslav Tomek, and Carolynn Look
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