The European Centre for International Political Economy (ECIPE) has rejected en masse the figures used as a basis by the European Commission for its forthcoming proposed directive to ensure the appropriate taxation of the Internet giants.
“For starters, the European Commission does not specify what makes a company digital”, the European Centre for International Political Economy (ECIPE) stresses. The think tank has studied the definition of 'digital economy' for two years and concluded that it was impossible to define its outlines.
The Centre also expresses concern at the fact that the Commission appears to be focusing on the businesses which represent the largest stock capitalisation.
According to the Commission's communication on the subject from September of last year (see EUROPE 11866), digital companies whose business model is based on the provision of goods or services to consumers ('business to consumers') on average pay an effective tax rate of 10.1%, and 'business to business' models pay 8.9%, compared to 23.2% for traditional international businesses. “Industry data show that these numbers do not at all reflect the overall tax burden of both traditional and digital corporations that operate in international markets including the EU”, the organisation stresses.
It argues that the Commission has underestimated the tax rates of Internet enterprises by 20%.
The association also states that half of digital businesses have profit margins of below 20% and a quarter of them have profit margins of less than 9% (Expedia, Netflix and Amazon, for instance). Twitter and Salesforce have made losses over the last five years.
The Commission is to present its proposal on 21 March (see EUROPE 11970). The French finance minister, Bruno Le Maire, told the Journal du Dimanche of 4 March that the Internet giants would be taxed between 2% and 6% of their turnover in Europe, “but probably closer to 2% than 6%”. (Original version in French by Élodie Lamer)