EU taxation commissioner, Pierre Moscovici, has told the European Commission’s ‘Masters of Digital 2018’ conference that digital taxation ‘is happening’.
EU taxation commissioner, Pierre Moscovici, has told the European Commission’s ‘Masters of Digital 2018’ conference that digital taxation ‘is happening’. Among measures being considered, he said, a ‘simple, stop-gap measure at EU level may be the only way’ to address the risk of a ‘disorderly’, fragmented, uncoordinated national approach. The EU must now decide whether digital taxation can be achieved in an orderly fashion, through cooperation at international level. However, at OECD and G20 level, Moscovici does not see much cause for optimism ‘on either the pace or scope of digital tax reforms’. EU member states ‘want solutions sooner rather than later’, he said.
The Commission will present proposals next month for the fair and effective taxation of the digital economy. These will look at where to tax, what to tax, and ‘may also consider some more immediate targeted measures’. These should aim to address ‘the most serious voids in our corporate tax systems when it comes to digital taxation’.
At the highest political level, Moscovici said, EU governments are bringing about a fundamental overhaul of corporate tax systems. He explained how digitalisation had ‘shaken to the core’ the existing corporate tax framework based on the concept of physical presence and the principle that profits should be taxed where value is created. The rules are ‘confounded’ by mobile, globalised and digital companies. It has become common for companies to have a significant digital presence in a member state and make substantial profits there, but enjoy tax levels close to zero. The effective tax rate of domestic digitalised businesses averages 9%, as against 21% for traditional business models.
This has revealed a ‘deep schism’ between where digital profits are generated and where they are taxed, creating a problem both of fairness and a threat to the tax base.
EU taxation commissioner, Pierre Moscovici, has told the European Commission’s ‘Masters of Digital 2018’ conference that digital taxation ‘is happening’.
EU taxation commissioner, Pierre Moscovici, has told the European Commission’s ‘Masters of Digital 2018’ conference that digital taxation ‘is happening’. Among measures being considered, he said, a ‘simple, stop-gap measure at EU level may be the only way’ to address the risk of a ‘disorderly’, fragmented, uncoordinated national approach. The EU must now decide whether digital taxation can be achieved in an orderly fashion, through cooperation at international level. However, at OECD and G20 level, Moscovici does not see much cause for optimism ‘on either the pace or scope of digital tax reforms’. EU member states ‘want solutions sooner rather than later’, he said.
The Commission will present proposals next month for the fair and effective taxation of the digital economy. These will look at where to tax, what to tax, and ‘may also consider some more immediate targeted measures’. These should aim to address ‘the most serious voids in our corporate tax systems when it comes to digital taxation’.
At the highest political level, Moscovici said, EU governments are bringing about a fundamental overhaul of corporate tax systems. He explained how digitalisation had ‘shaken to the core’ the existing corporate tax framework based on the concept of physical presence and the principle that profits should be taxed where value is created. The rules are ‘confounded’ by mobile, globalised and digital companies. It has become common for companies to have a significant digital presence in a member state and make substantial profits there, but enjoy tax levels close to zero. The effective tax rate of domestic digitalised businesses averages 9%, as against 21% for traditional business models.
This has revealed a ‘deep schism’ between where digital profits are generated and where they are taxed, creating a problem both of fairness and a threat to the tax base.
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