EU to implement digital levy regardless of OECD-led effort

By Julie Martin, MNE Tax

The EU Commission will continue to press ahead with its proposal for an EU digital levy to fund EU operations even if a global international tax agreement on digital tax is reached at the OECD and G20 level, Executive Vice-President Valdis Dombrovskis confirmed March 16.

Speaking at an informal ECOFIN press conference, Dombrovskis said the goal is to use the levy to fund EU operations beginning in 2023. In addition to securing revenue, the levy is needed “to make sure that everyone pays their fair share of tax,” he said.

“We will ensure that this will complement the OECD process and be WTO-compatible,” Dombrovskis added.

In its conclusions of July 21, 2020, the European Council tasked the Commission with putting forward a digital levy. In January, the Commission requested feedback on the design of its coming proposal for an EU-wide digital levy. An inception impact assessment was also released.

Some have wondered whether the levy will undermine efforts to reach a global agreement on the OECD’s proposed “pillar one” and “pillar two” updates to the rules for taxing multinationals. 

According to Dombrovskis, though, the EU is confident that an agreement can be reached by mid-2021. He added that he welcomed the recent US change in negotiating position, where it gave up its insistence that any pillar one reforms granting additional tax rights to market countries must be drafted as an optional safe harbor.

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Julie Martin

Founder & Editor at MNE Tax

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].

@mnetax

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Julie can be reached at [email protected].