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EP - work on corporate tax for digital companies kicks off

Taxes digital companiesMEPs kicked off their work on designing tax laws to better address the realities of digital companies on Wednesday. Consensus on the need to act is broad.

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 The committee of Economic and monetary affairs began its work on two pieces of legislation aimed at ensuring that digital companies, such as Google, Amazon or Facebook, are not let off the hook when it comes to paying taxes.

The first piece of the legislation aims at establishing a corporate tax which would apply to ‘companies with a significant digital presence’, thereby ensuring that tax is more difficult to avoid in countries where profits are made. The second piece of legislation aims at setting up an interim solution until the corporate tax can be established.

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During the discussion, led by the two rapporteurs Dariusz Rosati (EPP, PL) and Paul Tang (S&D, NL), a broad consensus emerged on the need to ensure that digital companies pay more in taxes, both to create a level playing field between them and more traditional companies and to address the feeling of unfairness among citizens that companies running huge profits should be contributing more to the societies they are active in.

The rapporteurs indicated that the thresholds proposed by the Commission for determining a ‘significant digital presence’ may need to be improved to reflect the realities experienced in smaller countries.

They also indicated that a better definition of what constitutes a digital service should be sought. Another point raised was that the 3% corporate tax rate the Commission proposed seemed to be too low, while offering no room to individual member states to opt for a higher rate. Finally, the idea was floated that the revenue and profits stemming from the sale of data should also be taxed, unlike what the Commission had proposed.

The draft reports will be presented by the rapporteurs on the 9th October while a committee vote on them is scheduled for 3rd December. After that a plenary vote is expected to take place in January and this will establish the opinion of the European Parliament.