Tax fairness for digital economy: stop unjust advantages for Tech Giants

The European Commission launched a new EU agenda for a fair corporate taxation in the digital sector. Following the proposal of France, Germany, Italy and Spain for a new levy on tech giants, the Commission is now taking leadership and announced measures for fair taxation.

The lack of a fair tax system has cost European countries billion of euros, as evidenced by the EC. The latest fines include the European Commission decision to order Apple to settle 13 billion euros of unpaid taxes in Ireland. A recent report by the Commission estimates that European states could have lost 5.4 billion euros in tax revenues from Google and Facebook between 2013 and 2015.

At the same time, this EU initiative aims at promoting growth-friendly incentives and a level playing field for all businesses. Building on the latest ECOFIN meeting document: “The notion of tax neutrality implies that all businesses, despite being local or international, small or large, innovative or keeping to their roots, should bear a similar tax burden”, the EU Commission has now stressed that “there are large disparities between large companies and SMEs” in taxation.

DIGITAL SME has persistently highlighted that SMEs suffer unjust competition from bigger firms. “Tax fairness must be a priority for the EU. If we are to regain digital sovereignty, the European Union should go further in these changes”, says DIGITAL SME President, Oliver Grün.

Grün is an entrepreneur himself. His Germany-based software company employs over 100 people. In Germany, the company pays 30% tax on profits, whereas tech giants often exploit legal loopholes, and thus pays less that 3%. “We cannot accept that we pay 10 times higher taxes in the EU than competitors from outside of the EU. This is unethical”, he states.

As the Commission announced that new rules could be set out as early as spring 2018, the DIGITAL SME President calls for wide agreement among Member States in order to create a EU tax law in the shortest term. Grün considers that “solving this problem is an urgency and should remain at the centre of Commission key actionsEuropean institutions and member states should act quickly and together towards a single European law on tax”, he says.

This is a crucial moment. If Europe wants to lead the digital revolution and not be a colony of US and Asia, it must offer good and fair conditions to its own digital companies, especially SMEs and startups”, he concludes.