Europe’s fierce enforcer of competition rules is threatening tech giants with tough new rules on tax if politicians fail to come to an agreement on changes to the current system.
Efforts to amend rules that would apply tax more fairly to firms which largely operate online such as Google, Amazon, Apple and Facebook, have been mooted in recent months.
France has led efforts calling for tax to be applied to sales rather than profit, gaining support from Germany, Italy and Spain. And more broadly, the OECD has led global efforts to clampdown on avoidance of corporation tax.
Now, Margrethe Vestager who levied the European Commission’s record €2.4 billion (US$2.7 billion at the time) fine against Google over the summer for anti-competitive behavior, has warned that it will make its own efforts to reform the system “if there is no international answer” by early next year.
“As we’ve looked at whether companies pay their fair share of tax, it’s become clear that our tax systems aren’t well designed for modern ways of doing business,” she said in a speech at France’s economy ministry on Tuesday morning, November 21.
“Tax systems that are based on a company’s physical assets can’t easily deal with digital companies. And in fact, domestic digital businesses pay less than half the effective tax rate of their offline equivalents.
“It will take more than competition rules to fix that issue. It will take a reform of our tax systems, not just nationally, but internationally.”
Full Content: NDTV Profit
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