The EU will reveal plans to tax global tech firms’ revenue to tackle tax avoidance the likes of Google and Facebook are attempting.
French Minister Bruno Le Maire has said the EU would reveal plans to tax tech firms’ revenue at a rate between 2% and 6%. Le Maire said this was a starting point, as the official EU directive is set to be revealed in the coming weeks.
The likes of Amazon, Facebook and Google will face the new tax rules and will be expected to pay up to 6% of tax on revenues across each country they operate in. Although the maximum tax levy to be imposed could be 6%, Le Maire has said it is more likely to be closer to 2%.
Currently tech companies can report their income from a number of destinations, which each differ in tax levy. Different locations offer lower tax levy, such as Ireland and it is enabling Silicon Valley companies to avoid the proper amount of tax they should pay. Now, large technology companies must pay the same set fee across any country they trade in.
The revised tax strategy will be implemented at the end of March and aims to rid the deprivation of billions of euros to EU governments, as well as helping smaller firms to compete more easily. According to the Organisation for Economic Co-operation and Development, the strategies currently being carried out by these companies is costing governments worldwide $240bn in lost revenue.
Le Maire spoke to Le Journal du Dimanch regarding large tech companies and the low levy rate. He said: “The heads of these companies know themselves that this system can’t continue. I would rather have a law that can be implemented quickly instead of drawn-out negotiations.”
Apple brought the concern to light a few months ago as the tech giant was forced to pay a £136m tax bill after avoiding the correct system from the years leading up to 2015. Responding to the UK taxman chasing the Silicon Valley Company, Apple said: “We know the important role that tax payments play in society. Apple pays all that we owe according to tax laws and local customs in the countries where we operate,”
What other regulations is the EU fighting for?
Apple already hit by the taxman
Social media sites could also face tax implications
Despite the likes of Apple coughing up the cash they owe to EU governments, the system would stil not require them to pay a fixed levy in the future. Therefore, implementing the new tax plans at the end of the month will overcome this.