The EU has abandoned its plans to introduce a 3% digital tax levy after lack of agreement between member states. The move was vetoed by Ireland, Denmark and Sweden, meanwhile the UK, France, Italy and Spain have all proposed to introduce a digital tax at a national level.
The Germans are evaluating their options.
The Organization for Economic Co-operation and Development (OECD), is already working on global reforms of digital taxation in order to narrow the tax loopholes used by digital multinational corporations.
The EU's president, Romania’s Eugen Teodorovici, speaking in a public session of Ecofin, the meeting of EU finance ministers, said there was no agreement on the tax despite months of talks. The EU will reopen its debate on possible tax measures in the bloc if the OECD’s planned reform is delayed.
Belgian minister Alexander De Croo told colleagues, in what he described as a heated debate, that “the last thing the single market needs is 28 national taxation regimes”. The same concern was expressed by commission vice-president Valdis Dombrovskis, who warned of market fragmentation.
The UK proposes to introduce a Digital Services tax from April 2020 on 2% tax of revenues of large digital businesses deriving value from UK users. It will:
- Only affect groups generating global revenues from in scope activities of over £500m a year.
- Apply to revenues generated from the provision of: search engines, social media platforms and online marketplaces, subject to a £25m per annum allowance.
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