Digital taxation

Key points

The EESC:

• suggests that, once an international agreement is reached on Pillar 1 of the OECD/G20 Inclusive Framework regarding the reallocation of taxing rights, the corresponding rules are swiftly implemented in the EU in coordination and simultaneous initiative with other major trading partners;
• deems that the EU can play a leading role with regard to the taxation of the digital economy. However, such a role should be played within an international agreement reached by the OECD/G20, as already happened for Pillar 2 with regard to the anti-base erosion mechanism;
• stresses that both Pillar 1 and Pillar 2 to be implemented within the EU as soon as it is feasible, achieving a high degree of consistency with the international agreement that will be negotiated within the OECD/G20 venue. Pillars 1 and 2 should be seen as a comprehensive and mutually integrated regulatory package;
• notes that a European legislative initiative on taxing the digital economy could greatly benefit the internal market, undoubtedly resulting in a more efficient framework when compared with separate national initiatives;
• calls for an international agreement on Pillar 1 that refrains, as far as possible, from overly complex rules and is aimed at achieving transparency, predictability and administrative simplification, keeping compliance costs low. An overcomplicated system could indeed create opportunities to circumvent the newly agreed rules, reducing their effectiveness;
• underlines that properly devised international tax laws on digital businesses are instrumental in preventing tax evasion and tax avoidance practices, as well as in designing a fair, stable and progressive taxation system.