EU says 'electroshock' tax plan for internet giants set for March

February 4, 2018
EU Economic Affairs Commissioner Pierre Moscovici, pictured in November 2017, said that on average internet giants pay a tax rate of 9 percent in Europe, compared with an average corporate rate of 23 percent

The European Commission will present by the end of March its plan for overhauling tax rules for internet giants, aimed at making them pay up in the countries where they earn their profits, a top official said Sunday.

EU Economic Affairs Commissioner Pierre Moscovici told France's Radio J that his proposals would "create a consensus and an electroshock" on taxing digital economy revenues.

Under EU law, American technology titans like Google and Facebook can choose to report their income in any member state, prompting them to pick low-tax nations like Ireland, the Netherlands or Luxembourg.

That deprives other nations in the bloc of any of the , even though they may account for a bigger share of the earnings.

The Organisation for Economic Cooperation and Development says such rules cost governments around the world as much as $240 billion (193 billion euros) a year in lost revenue, according to a 2015 estimate.

"The idea is to be able to identify the activities of digital companies, so we need a range of indicators—the number of clicks, the number of IP addresses, advertising, and eventually revenues... and then we'll find ways to tax them," Moscovici said.

He said the new rules would apply to giants like Google, Apple, Facebook and Amazon—together known as GAFA—as well as services like AirBnB and Booking.com.

"When you rent a room on Booking, it generates considerable for a company which we don't really know where it's located, and which pays very little in taxes," he said.

On average pay a tax rate of 9 percent in Europe, compared with an average corporate rate of 23 percent, Moscovici said.

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Eikka
not rated yet Feb 05, 2018
A company that makes money by displaying adverts online is charging another company who wants to advertise themselves, and that company in turn charges money from you to pay for the adverts every time you buy one of their products. If you don't buy the product, someone else will, and they in turn charge more money out of you for whatever service or item, to compensate their loss.

In that way, you are forced to pay for advertisements you don't want to see, to the benefit of some Google or Facebook who merely pretend that online advertisements are doing anyone a favor even as people ignore or block them. The clickthrough rates in reality are abysmal, but nobody will risk not advertising just in case - and so you pay.

So it's essentially a non-negotiable private tax. Then the government sees the amount of money going round and thinks, "Hmmmm... I want some of that", so they in turn slap a tax on the tax and that increases the cost even further.

Is this rational? Ethical?

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