'Watered down' EU digital tax will spare Amazon and Apple
'Watered down' EU digital tax will spare Amazon and Apple

  
  

	

	
	

	
	



  
  
    France and Germany have been criticised for proposing a "watered-down" version of an EU-wide digital tax that would spare the likes of Amazon and Apple.
Germany's finance minister Olaf Scholz and France's finance minister Bruno Le Maire on Tuesday suggested a 3pc levy on advertising sales in bid to salvage a proposed EU tax on big digital firms. 
The proposal is a compromise on a larger digital tax plan that would have hit some of the world's largest tech companies by taking into account activities from data sales and online marketplaces. 
The Franco-German solution will not cover these, which means companies focused on online advertising operations, such as Facebook and Google will be affected while Amazon and Apple will be excluded.  
Smaller companies could also suffer. Zoe Feller, partner at law firm Bird & Bird, said: "For all these big companies, the amount of revenue it is likely to be costing them is nothing and they are going to pass the cost to the smaller companies."
  

  
  

	

	
	

	
	



  
  
    Mr Scholz said he was "quite optimistic" that the Organisation for Economic Co-operation and Development (OECD) would agree on an international tax in 2020, which he argued would replace the EU digital tax. 
He said: "We need something that could be done by the EU if there is no agreement reached. This is why we think there should be a directive that would be active in the beginning of 2021 and in the following years tackling revenues of advertisement."
  

  
  

	

	
	

	
	



  
  
    
The European Commission today abandoned its Christmas deadline to agree a tax solution and instead called for member states to agree on an amended taxation proposal before the EU elections in March 2019.
The tax requires the support of all EU states, including small, low-tax countries like Ireland which have benefited by allowing multinationals to book profits there on digital sales to customers elsewhere in the European Union.
Mr Le Maire said: "Of course, France would have preferred to pass something more ambitious, but it's better to have the starting point for a compromise among the 27 member states instead of having a text that would be a non-starter for many countries."
The European Commission initially calculated that an estimated €5bn could be generated per year if the tax was applied at a rate of 3pc. 
The news comes as a blow for Philip Hammond who last month called for global cooperation on a digital services tax and unveiled plans for a unilateral UK tax.
The Chancellor said he intends to push ahead with a 2pc tax on advertising revenues and other digital revenues from big tech companies with over £500m in global turnover. The tax is expected to rake in £400m per year for HMRC.
The plans are currently under consultation and may change if an international agreement can be reached. He said a global deal on a new way to tax technology companies was preferable.
  

  
  

	

	
	

	
	



  
  
    
If the European motion were to pass unanimously, the levy could generate around €5bn by raising tax rates for around 120 of the biggest technology companies.

  
