On Thursday 16 October, the European Parliament’s Subcommittee on Tax Matters (FISC) organised an interparliamentary meeting to discuss national and international experiences of digital taxation. Both experts and parliamentarians were divided over the issue of a tax on digital services.
Benjamin Angel, Director of Direct Taxation, Tax Coordination, Economic Analysis and Evaluation at the European Commission’s DG TAXUD, summarised the current global situation. While progress at OECD level with the two-pillar solution is blocked, in particular by the US administration (see EUROPE 13670/7), some voices, notably in Africa, are pushing for a solution at UN level (see EUROPE 13721/25).
Similarly, María José Garde, Director General for Taxation at the Spanish Ministry of Finance and Chair of the EU Council’s Code of Conduct Group, defended the merits of a global tax on the digital economy. “In a 2018 report that dealt specifically with the challenges of the digital economy, it was already clearly stated that the solution had to be global, multilateral and stable”, she noted. “But also, in view of the difficulty of achieving this possible solution, I would not see any disadvantage in adopting intermediate, transitional measures which, if necessary, could cease as soon as this global solution was adopted”.
On the other hand, Cristina Enache, an economist at Tax Foundation Europe, pointed out that unlike corporate income tax, taxes on digital services are levied on revenues rather than profits. “It doesn’t take profitability into account”, she complained. “I wanted to mention that attributing value to a user that access a free service is economically challenging (...) So that’s why this illustrates why a stable and coordinated tax system like value added tax is preferable to fragmented and constantly shifting approaches”.
Some parliamentary representatives advocated the development of a European tax on digital services until an agreement is reached at international level, while others warned that such an isolated approach could put EU economies at a competitive disadvantage. (Original version in French by Anne Damiani)