Labour MEPs have backed new EU proposals to clamp down on tax avoidance by tech giants like Facebook, with the Commission today unveiling plans to ensure digital companies pay tax on profits in the country where they are generated in the same way as traditional, ‘brick-and-mortar’ companies are taxed.
The proposed measures would enable national governments to tax profits that are generated in their jurisdiction even if a company does not have a physical presence there. Digital platforms will be deemed to have a taxable 'digital presence' in a country if they satisfy one of the following criteria: an annual turnover of at least €7 million (£6.1m); more than 100,000 users in in a taxable year; or more than 3,000 business contracts for digital services are created between the company and business users in that period.
Last week, the European Parliament backed plans for a common corporate tax base (CCTB) and common consolidated corporate tax base (CCCTB) that will ensure digital companies such as Facebook pay taxes where their activity takes place.
Neena Gill MEP, member of the European Parliament economic and monetary affairs committee and member of the tax committee, said:
“The Cambridge Analytica scandal shows what can happen when companies feel they are above the law, under-regulated and severely undertaxed. Today’s proposals send a very clear message to digital companies like Facebook: the days of paying low levels of taxation on ever-greater profits are coming to an end - companies that seek to exploit loopholes and inconsistencies will no longer be able to avoid paying their fair share of tax.
“I welcome the fact that President Tajani has written to Mark Zuckerberg to come to the European Parliament and be held accountable to European citizens through their MEPs. Companies like Facebook have clearly flouted the rules, misusing data and minimising their tax contribution.”
Alex Mayer MEP, member of the European Parliament economic and monetary affairs committee, added:
“The fair taxation of digital giants like Facebook is long overdue. The exposé of mass data harvesting and their links to Cambridge Analytica makes it even more urgent that action is taken to ensure they respect users’ privacy and are no longer allowed to act outside the law and pay minimal levels of tax on maximal levels of profit.
“Every day, 20 billion emails and 150 million social media posts are written, and 650 million online searches are carried out in the EU. This is 2018. Yet on average, digitalised businesses face an effective tax rate of only 9.5 per cent, compared to 23.2% for traditional companies. The UK must back these new proposals, and keep them if it leaves the EU.”
Wednesday, March 21, 2018