Taxation in the digitalised economy (own-initiative opinion)

Key points:

The EESC:

• considers the digitalisation of the economy to be a great opportunity, and the EU Digital Agenda to be a key policy for the European Union;

• underlines the need for tax systems to take due account of new business models. The principles of a fair tax system – consistency, predictability, neutrality – are just as relevant as ever for public authorities, businesses and consumers;

• strongly believes that, in the context of the digitalisation of the economy, any changes to the rules for allocating taxation rights of profits among countries must be coordinated globally. The EESC therefore welcomes the close cooperation between the Commission, Member States and the OECD/G20 to support the development of an international solution, which will limit the risk of international double taxation. If an international solution cannot be reached, the EU must consider proceeding on its own;

• encourages the Commission and Member States to carefully consider all possibilities to eliminate any under-taxation of digital services, irrespective of where the company is located, for those sales that end up in a Member State. Services provided through platforms used by European consumers should be fully incorporated in the VAT system, as an essential component in addressing the tax issue;

• recommends that the allocation key suggested for the Common Consolidated Corporate Tax Base, with its three factors, could be used and applied, as a starting point, for the allocation of the residual profit, if this is the method agreed upon at the OECD;

• suggests that a formula consisting of four factors be used for the allocation of the residual profit, rather than the three factors included in the Common Consolidated Corporate Tax Base formula and the Committee fully recognises the complexity of the calculation of international taxation rights. At the same time an acceptable and fair allocation of taxation rights among countries is necessary;

• considers it necessary to strike a reasonable balance between the re-allocation of corporate profit taxes among net-exporting countries and net-importing countries, not to jeopardise the possibility of countries to meet their social and environmental objectives.