Taxation of profits of multinationals in the digital economy

Key points:

The EESC

• welcomes the fact that the Commission is taking digital tax initiatives, giving further momentum to international discussions by providing a clear example of how the current tax principles could be transformed;

• believes that the solution must ultimately be a global one in order to better harness the benefits of globalisation, with proper global governance and global rules and therefore welcomes close cooperation between the Commission, Member States and the OECD to support the development of an international solution;

• believes that it is very important to develop new principles on how to attribute corporate profits to an EU country and tax them, in dialogue with trading partners;

• stresses that the impact assessment should be complemented by an analysis of what impact the interim measure will have on investments, start-ups, jobs and growth. It also needs to show how the proposal will affect SMEs;

• underlines that the interim measure proposed by the Commission to tax certain digital services does not tax corporate profits but instead turnover and considers that this approach is different from the global corporate tax system, which is based on the taxation of profits but it recognizes that for digital companies that do not have a physical presence, the country of sales will not receive corporate profit taxes;

• is concerned that such a shift in taxation will benefit larger economies with many consumers at the expense of smaller exporting economies and underlines that any solution, whether short or longer term, to the taxation of digital business models must result in a fair and equal economic outcome for all economies in the EU;

• notes that there is no sunset clause or other mechanism ensuring that the interim tax measure is withdrawn when a longer-term solution is found and strongly encourages the Council to develop such rules if the interim measure should be introduced;

• stresses that the proposal to implement a turnover tax has initiated an intensive international debate, which was one of the purposes of the initiative. Europe now needs to come to a common position, in the ongoing discussions at the OECD.