This article is from the source 'nytimes' and was first published or seen on . It last changed over 40 days ago and won't be checked again for changes.

You can find the current article at its original source at https://www.nytimes.com/2018/03/21/business/europe-tech-digital-tax.html

The article has changed 3 times. There is an RSS feed of changes available.

Version 0 Version 1
Targeting Tech Giants, Europe Unveils Digital Tax Proposal Targeting Tech Giants, Europe Unveils Digital Tax Proposal
(about 2 hours later)
BRUSSELS — European authorities on Wednesday proposed revamping how digital businesses in the region are taxed, outlining wide-ranging changes that they hope will curb tax avoidance across the bloc. BRUSSELS — European authorities on Wednesday proposed revamping the way many technology companies in the region are taxed, outlining wide-ranging changes that they hope will curb tax avoidance across the European Union.
The system would tax a company’s revenues in the countries where they are generated, rather than its profits, which regulators say are too easily moved to regional offices in low-tax countries in order to reduce a business’s payments. The system would tax a company’s revenues in the countries where they are generated, rather than its profits. Regulators say so-called profit-shifting allows some businesses to use regional offices in low-tax countries to reduce payments.
The plan pits the European Union against the United States over retaining corporate tax revenue. It is one of a number of issues on which Brussels and Washington have clashed, from the broader regulation of the technology industry to a dispute over American steel and aluminum tariffs. The plan pits the European Union against the United States as both sides battle to retain corporate tax revenue. It is one of a number of issues on which Brussels and Washington have clashed, from the broader regulation of the technology industry to a dispute over American steel and aluminum tariffs.
The proposals outlined on Wednesday also further the argument that Europe is the world’s most prominent regulator of technology and digital services. The 28-nation bloc has outsize impact not just for its market of around 500 million customers, but because officials around the world increasingly take their cue from Brussels on how to regulate the tech sector. The proposals unveiled on Wednesday also support the argument that Europe is the world’s most prominent regulator of technology and digital services. The 28-nation European Union has outsize impact not just for its market of about 500 million customers, but because officials around the world increasingly take their cue from Brussels on how to regulate the tech industry.
“The digital revolution has turned our economies upside down,” said Pierre Moscovici, the European Union’s tax commissioner. “When you like a picture, when you post a video on social media,” he said, “your click sets in motion a chain of business transactions and thus creates considerable profits.” “The digital revolution has turned our economies upside down,” said Pierre Moscovici, the European Union’s tax commissioner. “When you ‘like’ a picture, when you post a video on social media,” he said, “your click sets in motion a chain of business transactions and thus creates considerable profits.”
“But under today’s rules those profits are not taxed,” Mr. Moscovici said, adding: “The current legal vacuum is creating a substantial shortfall in the budgetary revenues of our member states.” It also creates an uneven playing field between digital and traditional businesses, he argued. “But under today’s rules, those profits are not taxed,” Mr. Moscovici said. “The current legal vacuum is creating a substantial shortfall in the budgetary revenues of our member states.” It also creates an uneven playing field between digital and traditional businesses, he argued.
The European Commission, the European Union’s executive arm, argues that tech companies use the profit-shifting method to excessively reduce their tax burdens. In documents leaked before Wednesday’s announcement, officials estimated that digital businesses in the bloc pay an average effective tax rate of just 9.5 percent, compared with 23.3 percent for traditional businesses. The European Commission, the European Union’s executive arm, says tech companies use the profit-shifting method to reduce their tax burdens. In documents obtained by The New York Times before Wednesday’s announcement, officials estimated that digital businesses in the bloc pay an average effective tax rate of just 9.5 percent, compared with 23.3 percent for traditional businesses.
Under the proposals, a 3 percent tax would be levied on the sale of user data, targeted advertising, and “interfaces that put together buyers and sellers.” Minimum thresholds, however, will mean that only the bigger tech businesses across all of the bloc’s member states will be subject to the tax, and companies will be able to deduct the digital tax from its corporate tax payments to avoid double taxation. Officials estimate the tax would generate at least 5 billion euros, or $6.15 billion, annually for European Union member states. Under the new proposals, a 3 percent tax would be levied on the sale of user data, targeted advertising and “interfaces that put together buyers and sellers.” Officials estimate the tax would generate at least 5 billion euros, or $6.15 billion, annually for European Union member states.
The plans announced on Wednesday are not certain to be implemented, as they require the approval of the European Union’s member states, and there is considerable disagreement over how much reform is needed. Notably, while big countries like France and Germany have pushed for changes, at least two smaller member states have opposed any changes to the system, which they say allows them to compete to attract employers by offering tax advantages. Minimum thresholds, however, will mean that only large tech businesses will be subject to the tax, and companies will be able to deduct the payments from their corporate tax contributions to avoid double taxation.
But despite concerns regarding this regional proposal, policymakers in European countries and countries outside of Europe largely agree that reforms are necessary to make global companies — whether digital or not — pay their fair share of tax. The plans announced on Wednesday are not certain to be carried out, as they require the approval of the European Union’s member states, and there is considerable disagreement over how much change is needed.
There has been particular focus on the role tech companies play in society in recent days, amid revelations that a political data firm with ties to President Trump’s 2016 campaign gained access to private information on tens of millions of Facebook users. Facebook is one of several that has been in the cross hairs of regulators in Europe over mishandling of personal data, tax avoidance, and antitrust violations. Notably, while big countries like France and Germany have pushed for changes, at least two smaller members have objected, saying the system allows them to attract employers by offering tax advantages.
Ireland — which is in a dispute with the European Commission over its tax treatment for Apple — quickly voiced opposition to the new plans on Wednesday. Leo Varadkar, the country’s prime minister, said the measures were “ill judged,” and argued that global solutions should be found instead.
Still, policymakers both within and outside the European Union largely agree that changes are necessary to make global companies — whether digital or not — pay their fair share of tax.
The role that tech companies play in society has gotten particular attention in recent days, amid revelations that a political data firm with ties to President Trump’s 2016 campaign gained access to private information on tens of millions of Facebook users. Facebook is one of several companies that have been in the cross hairs of regulators in Europe over the mishandling of personal data, tax avoidance and antitrust violations.
Last year, the European Commission fined Google €2.4 billion for abusing its dominant market position, while companies like Apple, Amazon and Qualcomm have also been investigated or penalized. The dominance of Silicon Valley in the industry has, however, spurred criticism that European regulators are too harsh on American businesses, an allegation officials in Brussels strongly reject.Last year, the European Commission fined Google €2.4 billion for abusing its dominant market position, while companies like Apple, Amazon and Qualcomm have also been investigated or penalized. The dominance of Silicon Valley in the industry has, however, spurred criticism that European regulators are too harsh on American businesses, an allegation officials in Brussels strongly reject.