Taxation of digital business activities should be tackled at global level

Digital tax

Any solution for the taxation of digital business models proposed for EU level must be in line with common international corporate taxation practice and agreements, says the EESC in a recently adopted report. Instead, the European Commission's legislative package aims to tax businesses' turnover rather than profits, and to levy taxes where sales take place instead of where value is created.

In the EESC's view, this approach could jeopardise the integrity of the EU single market and lead to double taxation. The complexity of international tax systems and therefore uncertainty for investors could increase. Given these concerns, the EESC is calling on the Commission to carry out a complementary impact assessment of the proposed measures.

It is very important to develop new principles on how to attribute corporate profits for digital activities to an EU country and tax them, says the EESC in its report. Digital companies should contribute to public finances just like traditional businesses and share the tax burden needed to finance public services, but any solution should be fair and consensus-based and create a level playing field for all EU economies.

Despite its concerns, however, the EESC sees the Commission's digital tax initiatives as a step in the right direction and welcomes its ambition to find a global solution. The Commission has launched an international debate and now it is of the utmost importance that the Member States come to a common position and advance the ongoing discussions, so as to achieve the necessary global solution at OECD level. (jk)