- Europe’s de-facto tech regulator Margrethe Vestager threw her support behind a radical plan to tax the revenue of major tech firms.
- France and the UK proposed levies on the revenue technology giants generate locally, angering the Trump administration.
- Amazon, Facebook, and Google have all lobbied against the plans.
- Both countries recently drew back from their tax plans and Vestager said if within a year no progress has been made the EU will draw up its own tech tax.
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Margrethe Vestager, the EU lawmaker who Donald Trump has criticised and described as Europe’s “tax lady”, has thrown her weight behind plans to tax tech firms for the revenue they make in European markets.
As Europe’s competition commissioner, Vestager slapped tech companies including Google and Apple with record-breaking fines. In September 2019, she was also appointed to oversee Europe’s digital policy, broadening her remit and power.
Vestager told reporters on Thursday that she was in favour of regulation which would tax big tech companies for the revenue they make within a country, adding that the EU will step in to make a similar tax within a year if international efforts to construct such taxes fail.
As it stands, no country taxes the major tech companies on the revenue they make overseas. They are instead taxed on profits.
The UK and France have both proposed similar laws that would radically alter this, taxing tech firms between 2% and 3% of local revenue. The idea is to counteract the effect of complex tax setups which allow the likes of Apple, Amazon, and Google to funnel sales through low-tax European countries, thereby minimising their tax.
Europe’s moves towards a revenue tax have prompted fury from the Trump administration, since the rule change would predominantly impact Amazon, Facebook, Google, and the other US giants. The three firms have all lobbied against such tax changes, describing France’s plans as “unjustifiable.”
Following an intense trade battle in which Trump threatened to levy tariffs on French cheese and wine President Macron agreed to delay France’s tech tax. Meanwhile, the OECD instructed the UK to “hold fire” on its own tax, which was due to come into force in April.
These road bumps seem to have spurred Vestager on.
“I think it is very important that we keep up the momentum. Because of this very fundamental injustice that most people and businesses pay their taxes and they are competing with businesses who create value but do not pay taxes,” said Vestager, as reported by the Guardian.
This isn’t the first time the EU has talked about imposing its own tech tax, a 3% tax was proposed in 2018 but was scuppered by a handful of member states including Ireland, Sweden, and Denmark.