EU will increase digital tax rates to "punishment" Google, Amazon and Facebook?

The EU has announced plans to raise taxes on digital businesses like Google, Amazon and Facebook for the purpose of paying fair taxes. Also, a tax will be imposed on businesses operating in Europe but based in other countries.

“Tech giants” including Google, Amazon and Facebook are likely to face high tariffs in the European market.

The European Commission – in charge of the European Union (EU) has announced plans to impose taxes on companies’ businesses, rather than where they are headquartered. The proposed changes also include that digital businesses will pay higher tax rates than usual.


According to European Commission data, digital companies pay 9.5% of income tax on average, while traditional businesses pay 23.2%.

Pierre Moscovici – EU Commissioner in charge of taxation said: “The digital revolution not only upsets our economy but also drastically changes the way businesses create value today” . Therefore, Pierre thinks that tax payment must be more equitable between traditional and digital businesses, and change the outdated regulations as of today.

Amazon CEO Jeff Bezos, CEO Larry Page of Google’s parent company Alphabet, and COO Sheryl Sandberg of Facebook during a meeting with tech industry leaders in New York, NY in 2016.

The proposals included a “joint EU solution” that would allow EU countries to levy profits tax on businesses operating within their own region, even when these companies are not based. here.

However, a taxed company will have to meet one of the following criteria: annual sales (in any EU country) in excess of $ 8.6 million; more than 100,000 people use the service in a taxable year; or more than 3,000 business contracts for digital services created between the company and the user in this 1 year.


Current efforts from Europe to force large companies to pay the right amount of tax are not new. For example, Amazon is headquartered in Luxembourg but the main business activities in different European countries, also have to rearrange the proper tax distribution. Last year, the European Commission asked Luxembourg to return nearly $ 307 million in “illegal” taxes Amazon paid.

Previously, Amazon also recorded all the revenue from European countries at its headquarters in Luxembourg and divided taxes into small amounts to pay for these countries. Although the tax structure changed in 2015, the tax rates payable in the EU countries are also different. But under the newly introduced rules, companies like Amazon will once again have to record revenue in the EU countries where the business is operating.

According to European Commission data, digital companies pay 9.5% of income tax on average, while traditional businesses pay 23.2%.

This is not an act of “anti” against US businesses

After the tax policy announcements, Moscovici told CNBC that the new rules “are not a single-target decision for American companies. It’s just to properly tax the public. companies create value through digital activities in Europe only “.

Recently the relationship between the US and Europe has become strained after President Trump announced a new tax law on imported steel and aluminum to ensure national security. Europe – one of America’s longtime allies has disagreed with these decisions and is looking for ways to be “exempt from the law” by Trump.

Quynh Nhu / CNBC
* Source: ICT News


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