BUENOS AIRES (Reuters) – European finance leaders called for progress on global rules to tax the digital economy at a meeting of G20 finance ministers and central bankers in Argentina on Sunday 22 July 2018, putting them at odds with US counterparts. The final communique reaffirmed a commitment to address the impacts of the shift to a digital economy on the international tax system by 2020, without giving more details.
The European Commission proposed rules earlier this year to make digital companies pay more tax, with US tech giants such as Alphabet’s Google, Facebook and Amazon set to foot a large chunk of any bill.
Some 200 companies would fall within the scope of the new tax, European officials said at the time, estimating additional annual revenues of about €5 billion.
Major digital companies had “to pay their fair share of tax, because basically what we are talking about here is fairness,” European Commissioner for Economic and Financial Affairs Pierre Moscovici told reporters at the G20 meeting. He said he was calling for a turnover tax to be adopted before the end of the year as an interim solution. However, some EU members have voiced concerns their companies could be affected by such a tax and international partners may respond with retaliatory measures.
Australian Treasurer Scott Morrison said the G20 discussions were useful because they established the root of the problem: that “no one knows” how to measure for tax purposes the value of the data users of social media services like Facebook create outside of the countries where those companies are based. He said if those technical issues were not resolved, more countries would start taking “interim measures”.
“We’re not convinced at this point about the efficacy of those interim measures – which is basically a sales tax on digital advertising,” Morrison said. “It is more important to focus on those technical issues rather than the pot-of-gold approach, which is how much revenue can be raised.”
FJM 14.8.18
[LTN 141, 25/7/18; Tax Month – July 2018]
Comprehension questions (answers available)
- In the G20 meeting, in Argentina, did the Europeans pushing for a turnover tax on the operation of digital businesses in their economy?
- Would major US companies, such as Google, Facebook and Amazon pick up a large share of cost paying such taxes?
- Is the USA happy about this?
- Is Australian Treasurer in favour of what he calls a ‘digital adverting sales tax’ as an interim measure?
