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First cracks emerge in EU plan to raise online giants' tax bill
September 16, 2017 / 7:33 AM / 2 months ago

First cracks emerge in EU plan to raise online giants' tax bill

TALLINN, Sept 16 (Reuters) - First signs of open scepticism appeared on Saturday over a European Union plan to raise the tax bill of digital multinationals, as some finance ministers from smaller EU states raised concerns about the economic impact.

France is pushing for a new way of taxing online giants on the basis of their turnover, rather than their profits, to increase tax revenues from companies such as Google or Facebook, which are accused of paying too little in Europe.

It has gathered the support of about a third of the 28 EU governments but would need the backing of all member states to reduce risks of legal challenges.

“We should be very careful,” Denmark’s Finance Minister Kristian Jensen said, warning of the risks of pushing innovative companies away from Europe.

Speaking on his arrival at a meeting of EU finance ministers in Estonia, which will focus on taxation of the digital economy, he said that he was “always sceptical of new taxes”.

His remarks were echoed by Luxembourg’s Finance Minister Pierre Gramegna, who acknowledged there was an issue with online giants’ taxation, but said a tax on turnover would hit loss-making companies which are otherwise exempted from paying.

He said any EU solution would need to be backed at global level to avoid affecting Europe’s competitiveness. “It does not make any sense” for Europe to move without a global agreement, he said.

The Czech Republic and Malta both said technical work on a turnover tax would be very complicated.

Estonia, which holds the EU’s rotating presidency, pushed an alternative plan to tax companies where they have a digital, and not only physical, presence in a country.

Estonia’s Finance Minister, Toomas Toniste, said a global solution “would be the best”.

Other EU member states were more supportive, with Dutch Finance Minister Jeroen Dijsselbloem calling France’s plan “a very good initiative”.

Belgium also backed it, though Finance Minister Johan Van Overtveldt said technical work was necessary. Germany has already come out in support.

France’s Finance Minister Bruno Le Maire urged the EU Commission, which is in charge of making legislative proposals, to come up with a formal text by mid 2018.

The Commission will set out the possible legal options in the coming days, before a summit of EU leaders on Sept. 29 dedicated to digital issues. (Reporting by Francesco Guarascio; Editing by Andrew Heavens)

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