According to a top European official over CNBC on Saturday, Big Tech needs to pay a “fair amount” of taxes in Europe since they are the “real winners” in this pandemic. These comments come amidst an ongoing argument between the United States and the European Union over the taxation of companies like Alphabet, Amazon, and Apple.
“It is a major problem.”
Paolo Gentiloni, European Commissioner for economics and taxation.
Gentiloni also emphasized the difficulty of overcoming differences with the United States.
On the other hand, the former Italian prime minister said that it was impossible to take the idea that the tech giants who are the winners of the pandemic are not paying the right amount of taxes in Europe. The European Commission, EU’s executive arm, wanted a 3% digital levy, saying that the tax system needs updating according to the digital age. Still, the White House mentioned that a digital tax wasn’t fair as it unreasonably affected American firms.
The European Commission pointed out that digital companies, on average, pay an effective tax rate of 9.5% compared to the traditional businesses that pay 23.2%. However, in the Covid-19 pandemic event, Big Tech gets more advantages, with many clients depending on these companies for staying connected, teleworking, shopping, and other services.
The governments are in dire need of more funding, and levying new taxes is one way of getting more funds. With this, the EU is considering a new digital tax in 2021 if negotiations at the OECD-level collapse by the end of the year.
“The giants of the digital platforms are the real winners of this crisis, from the economic point of view… If we do not have decent results at the global level, the European Commission will come out next year with our own proposal.”
Paolo Gentiloni
Breaking negotiations, the United States walked out of the agreement in June, presenting doubts about any feasible progress this year. Gentiloni mentioned there had been progressing at the technical level, but the upcoming presidential election in the United States affected the process.
“We are in an electoral year in the U.S., and I think this also has an influence; nonetheless, the EU needed to insist on the necessity of a global solution.”
Paolo Gentiloni
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