A proposed plan to make sure that digital giants like Apple, Google and Facebook pay more in tax within Europe has moved forward with remarkable speed and a paper will be put to European governments at the end of the month.
That's according to the European Commission's tax commissioner Pierre Moscovici, who told reporters [video, 10 mins in] outside a meeting in Estonia on Friday that "all options are on the table," but that "the digital economy should be taxed" and tech giants must "pay their fair share."
According to Moscovici, the EC will produce a paper for an upcoming meeting of ministers on September 29 that will give them a range of options so they can "reach political consensus" on how to move forward.
The idea of taxing digital giants differently was formally proposed earlier this week in a joint letter from the finance ministers of France, Germany, Italy and Spain. It stated, bluntly: "We should no longer accept that these companies do business in Europe while paying minimal amounts of tax to our treasuries."
European countries are furious that under the current rules, digital companies are only taxed on profits, and most of the tax only applies within the country where their European headquarters is based. In the case of Apple and friends, that is Ireland – and Ireland has long offered extraordinary tax incentives that the European Union claims are illegal.
In 2015, for example, Google paid just €6.7m ($8m) in corporate tax to France despite making hundreds of millions of dollars from French citizens.
Moscovici said he "welcomed" the letter from the finance ministers, but then dodged a question that asked whether that letter's proposal to introduce a turnover tax was viable.
All your tax base are belong to us
"We will explore all options," he noted, before dodging another question about whether low-tax countries Ireland and Malta would accept such a proposal. Instead, he pointed to broader tax reform under discussion in Europe – the Common Consolidated Corporate Tax Base – into which he suggested that the digital companies could be pulled.
He also suggested that Europe would push for an even larger tax agreement by repeatedly referencing the group of G20 countries and the OECD, and stating that a "global approach" would be the best option.
And in a further sign that Europe is serious about pushing for some kind of tax reform, the issue was included in a state of the union letter [PDF] put out by EC president Jean-Claude Juncker.
That letter includes a push for:
- "Swift adoption ... by multinational companies to publish key tax information on a country-by-country basis"
- A "fair taxation package for the creation of a single EU value added tax area"
- "Establishing rules at EU level allowing taxation of profits generated by multinationals through the digital economy"
Despite the determined push, it is far from certain that a new proposal will close the loophole that US tech giants have been using to pay tiny amounts of corporate tax in Europe.
Such a significant change would require agreement by all EU member states and the EU parliament – and several countries benefit very handsomely from offering low tax rates to digital companies. ®