EU puts its digital tax plan on ice

EU puts its digital tax plan on ice

access_time2021-07-14 09:20:21

The EU has said it will suspend its plans to tax online tech giants in the light of global efforts to agree a minimum corporate tax rate of 15%.

The move comes after G20 finance ministers agreed at the weekend to support the global effort, which will now go before G20 leaders in October.

The EU said putting its own plan on ice would make it easier to achieve "the last mile" of the international deal.

But Ireland declared it would stick to its lower tax level of just 12.5%.

"We have decided to put on hold our work on our new digital levy," said European Commission spokesman Daniel Ferrie.

The announcement coincided with a visit to Brussels by US Treasury Secretary Janet Yellen, who urged all 27 EU countries to join the global deal.

However, Ireland's Deputy Prime Minister Leo Varadkar, said his country's 12.5% corporate tax rate had "worked for Ireland" and said the reform plan was about "big countries trying to get a bigger share of the pie".

"We've taken about €10bn a year in corporation profit tax, double what the average European country does per head," he said.

"It's one of those examples of where low taxes result in higher revenues, in a world where wealth capital, labour, corporations are very mobile."

Governments have long grappled with the challenge of taxing global companies operating across many countries.

That challenge has grown with the boom in huge tech corporations such as Amazon and Facebook.

Efforts in the UK and EU to tax the online giants have caused friction with the US, which has felt its companies are being unfairly targeted.


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