Work has got underway at the European Parliament on the Commission's two proposals on the taxation of the digital sector: the long-term 'structural' solution and the interim solution ('digital services tax' or DST), to tax the gross income of the activities of digital platforms at a level of 3% (see EUROPE 11986).
On Wednesday 29 August, there was just an initial exchange of views between rapporteurs and members of the committee on economic and monetary affairs (ECON), but the MEPs took the opportunity to raise several technical questions.
The Parliament is only consulted on taxation matters, but it wishes to have its voice heard. Before getting down to work on the dossiers, the rapporteurs wished to take the temperature of the member states, which must decide unanimously, and several of which have already clearly expressed their staunch opposition to regulation at European level.
“It would be good to know to what extent there is a chance in the Council to agree on a common position”, Dariusz Rosati (EPP, Poland), rapporteur on the structural solution proposal, ventured to ask.
Although everyone agrees that there is a need to do something, that is as far as the consensus goes and opinions continue to differ over the option to be set in place (see EUROPE 12012).
In the view of the rapporteur on the interim solution, Paul Tang (S&D, Netherlands), neither the 'laisser-faire' approach favoured by countries such as Ireland and Luxembourg, nor passively waiting for an international solution at OECD level, the preferred option of the CEOs of certain digital giants, who are well aware that this will take time, is the way forward.
On the other hand “the DST is a clear signal that Europe is willing to take action to address the unfairness and inefficiency in the current system”, he stressed.
However, several questions have already been raised, such as the rate for this tax. Given the astronomical sums digital giants earn every year, is 3% enough? Should there not be a higher threshold? Should there be a minimum rate or a fixed rate? And why not let member states set a higher rate if they so wish? - are among questions the rapporteur is asking.
As regards the proposal for the 'structural' solution, the thresholds set out by the Commission are also the subject of debate.
Readers may recall that the 'structural' solution aims to define a 'significant digital presence', to allow the tax authorities to determine the place where value is created. To do this, the Commission is proposing that the digital presence is established on the basis of three criteria, namely: turnover, number of contracts and number of users.
Rosati has also questioned the relevance of the thresholds set out in the proposal to cover this concept and how they were calculated.
He also considers that the definition of 'digital services' was too vague and would leave room for misunderstandings. The proposal sets out a distinction between digital services that consist of using a network and those that consist of providing a payment or communication. The latter category is not covered by the proposal, he observed, raising the question of how they can be distinguished between practically.
“I also have doubts on the enforceability of this whole system”, he went on to stress, as it will doubtless require the creation of a new agency in each member state, but also specific and technical methodologies to verify whether digital services do indeed fall under the scope of application.
Ashley Fox (ECR, UK) considers that the keyword should be proportionality, to avoid discriminating against small digital companies. “We need to ensure that we send a message that we welcome digital businesses to our countries”, he stressed.
Following this first 'stock-take', the next stage will be a public hearing on Monday 10 September. The draft reports for the opinion are expected to be ready in early October, with a view to a vote at the ECON committee in December, moving to plenary in early January. (Original version in French by Marion Fontana)