US Tech Companies May Face High Taxes In Europe

Sep

23

2017

The European Commission said on Thursday it may seek to implement tax reform to increase its revenue from US technology companies without receiving support from the United States and other rich countries, which could spark a new conflict across the Atlantic Ocean. The time it takes rich countries in the world to reach an agreement on how to impose taxes normally on transnational companies such as Google.

On average, such companies pay less than half of other companies in Europe, and the Commission raised the possibility of using the EU’s unknown rules that prevent states from vetoing tax-related decisions in order to prevent some small EU economies such as Ireland Or Luxembourg, which hosts many foreign companies that may try to prevent this move.

The European Union usually decides tax issues with unanimous support of 28 members. The Commission on Thursday set three tax options targeting Internet companies that can be agreed relatively quickly at the EU level or a small group of EU countries. Trading instead of digital company profits, or online advertising tax, while the third option is about charging a fee for payments to Internet companies.

In the long term, the EU wants to change existing tax rights to ensure that digital businesses have large operations, but there is no physical presence in a country that pays taxes there, rather than allowing them to redirect their profits to low-tax jurisdictions. Is to reach agreement on this subject in the Organization for Economic Cooperation and Development (OECD), which includes the United States and Japan.

“The EU should be prepared to act in the absence of sufficient global progress,” said Valdes Dombrovsky, vice president of the commission, at a press conference in Brussels. The move is likely to raise Washington and other rich countries that are home to many of the world’s technology giants.

In the document, which identifies the distortions caused by low taxes paid by digital companies, the Commission cited several US companies such as Amazon Online Retail, Facebook Social Networking, Netflix Internet Entertainment and Airbnb. The Commission emphasized that unilateral initiatives Taken in the EU will need to be carefully evaluated to ensure their compatibility with WTO rules.

The EU should first reach a compromise agreement between 28 members by December, and some countries have already expressed their opposition to new taxes on digital companies, especially if it is decided without a global agreement. To overcome this, the commission said that There is debate over whether EU countries will be stripped of veto power over tax issues, according to an article in EU treaties that allows for such extraordinary work in case of market distortions.

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