Economy

European Union countries want tech giants to pay taxes wherever they create value

European Union countries want tech giants to pay taxes wherever they create value”

The letter, signed by French Finance Minister Bruno Le Maire and his counterparts Wolfgang Schaeuble of Germany, Pier-Carlo Padoan of Italy and Luis de Guindos of Spain, was addressed to the EU's Estonian presidency and the bloc's Executive Commission.

"We should no longer accept that these companies do business in Europe while paying minimal amounts of tax to our treasuries", the four ministers wrote in a letter seen by Reuters and Agence France-Presse last week. They insist that the issue is a question of "economic efficiency", as well as justice and sovereignty.

So far, they are only paying taxes where they are physically present. Accordingly, the ministers requested a new tax structure be implemented, an "equalization tax" as it was called, which would have the companies taxed on their turnover at a rate that reflected the corporate tax in the country where their revenue was earned. Various reports have surfaced online in the past few years about tech companies being investigated for tax avoidance in various European nations for taking advantage of this tax arrangement.

"It is urgent to close the gap in global tax rules in order to ensure the fair taxation of profits from businesses in the digitalised economy", said an European Union document seen by AFP, prepared for a meeting of finance ministers in Estonia on September 15.

The ministers want to put the issue on the table for an European Union meeting in Estonia (where the current presidency is located) on September 15th. Google recently dodged a tax bullet in France because its operations are based in Ireland, and it's clear that the countries want to eliminate that technicality going forward.

In July, Google successfully won a case in France against a €1.2 billion tax bill, as a court ruled the company had not abused tax loopholes to avoid paying tax.



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