European finance leaders called for progress on global rules to tax the digital economy at a meeting of G20 finance ministers and central bankers on Sunday, putting them at odds with US counterparts, Reuters reports.
The European Commission proposed rules earlier this year to make digital companies pay more tax, with US tech giants such as Google, Facebook and Amazon set to foot a large chunk of any bill.
Some 200 companies would fall within the scope of the new tax, European officials said at the time, estimating additional annual revenues of about 5 billion euros (US$6 billion).
Major digital companies had “to pay their fair share of tax, because basically what we are talking about here is fairness,” European Commissioner for Economic and Financial Affairs Pierre Moscovici told reporters at the G20 meeting in Buenos Aires.
He said he is calling for a turnover tax to be adopted before the end of the year as an interim solution.
US Treasury Secretary Steven Mnuchin said earlier this year that he “firmly opposes proposals by any country to single out digital companies,” noting that those firms were key contributors to the US economy.
Australia Treasurer Scott Morrison said the G20 discussions were useful because they established the root of the problem: that “no one knows” how to measure for tax purposes the value of the data users of social media services like Facebook create outside of the countries where those firms are based.
He said if those technical issues are not resolved, more countries will start taking “interim measures.”
“We’re not convinced at this point about the efficacy of those interim measures – which is basically a sales tax on digital advertising,” Morrison said.
“It is more important to focus on those technical issues rather than the pot-of-gold approach, which is how much revenue can be raised.”
The European Commission wants a long-term, global solution based on a new method of calculating tax rates but has pushed in the meantime for the revenue tax to recoup revenues lost by EU states to large digital firms, officials said.
The EU’s proposed levy on corporate turnover would be a major shift from existing rules, whereby companies are charged on their profits and pay no tax if they report losses, Reuters noted.
“Taxation should be where the moneymaking is and if the digital economy is making the money all over the world it doesn’t really make sense if they only will declare their income in the United States,” said Hubert Fuchs, the European Council representative to the G20.
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