by Julie Martin
The EU Commission has published the results of its questionnaire on the taxation of the digital economy along with 121 comment letters responding to its consultation on this issue.
Eighty-two percent of the 416 questionnaire respondents said that the international tax rules for the digital economy need to be changed and sixty-five percent said that the current rules do not allow fair competition between traditional and digital companies.
The comment letters include submissions by members of academia and research institutions, businesses and business representatives, international organizations, civil society organizations, government officials, and individuals.
The Commission also hosted a roundtable today with digital companies to discuss how to best tackle the issue of fair taxation. Another meeting is scheduled with another panel next week, said tax commissioner Pierre Moscovici.
“I think this kind of exchange is absolutely necessary,” Moscovici said, noting it is important to hear stakeholders’ reactions to the EU’s proposals. The EU does not want to harm the digital economy, he said.
The efforts are being undertaken as the Commission prepares its proposal for the taxation of the digital economy, expected to be released March 21.
According to a February 26 leaked document, the EU proposals will include a temporary 1-6 percent tax on the revenues of digital firms that have high user involvement. It will also include a proposal for permanent tax rules that establish taxing rights based on a firm’s significant digital presence and for new profit allocation rules.
The effective tax rate of digital companies in the EU is likely half that of traditional companies, the EU Commission says.
Julie Martin
Julie Martin is the founder of MNE Tax. She edits the publication and regularly contributes articles on new developments in cross-border business taxation.
Julie has worked as a tax journalist and editor for more than 13 years. Prior to that, she worked as an in-house tax attorney in New York. She also holds an LLM in taxation from New York University School of Law.
Julie can be reached at [email protected].
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