French President Emmanuel Macron’s ambitious plans for an EU digital tax targeting US tech giants faced strong headwinds yesterday from small member states eager to defend their strong ties with Silicon Valley.
Finance ministers from the EU’s 28 member states were to discuss a controversial proposal aimed at claiming a bigger share of billions of euros from mainly US multinationals that shift earnings around Europe to pay lower tax rates.
“It must be discussed with the Americans, because if we do this all by ourselves as the EU, this digital tax will be very ineffective,” Luxembourgian Minister for Finances Pierre Gramegna said as he arrived for talks in Sofia.
Luxembourg hosts the EU headquarters for Amazon.com Inc, and along with Facebook Inc and Apple Inc hub Ireland, is loathe to see US tech giants head for the exit.
Getting all countries on board is crucial, as tax reforms in the EU require unanimity.
The special tax is the latest measure by the EU to rein in Silicon Valley giants and could also further embitter an ill-tempered trade row pitting the EU against US President Donald Trump.
“It is not an anti-[US tech giant] tax, it is not an anti-US tax, it is not a protectionist approach, it is something which is in interest of all Europeans wherever they live,” said European Commissioner for Economic and Financial Affairs, Taxation and Customs Pierre Moscovici, who is driving the plan.
The transatlantic shot across the bow has been championed by Macron, who believes the measure would be a popular accomplishment for the EU ahead of European elections next year, in which anti-Brussels populists could do well.
The most controversial part of the plan is to slap an emergency tax on digital companies with worldwide annual turnover of more than 750 million euros (US$911.1 million), such as Facebook, Google, Twitter Inc, Airbnb Inc and Uber Technologies Inc.
“On the European level I doubt it’s going to be soon, because to have consensus on tax issues is not easy,” Slovak Minister of Finance Peter Kazimir said. “We are ready to do it, [but] on a national level ... in line with OECD [Organisation for Economic Co-operation and Development] recommendations.”
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