US Chamber And European Tech Leader Seeks Cooperation With EU On Digital Services Tax (DST)

; posted on
November 1st, 2018

The US Chamber and European Tech Leader wrote a letter to the EU Secretary and Ministry of Finance respectively to reconsider the implementation of proposed proposal on digital service tax.

Concerning Issues

The U.S. Chamber and European Tech Leader have the same concerns on the proposed measure initiated by the commission in March. Both parties believe that the proposed DST hinders investment and discourages innovation and entrepreneurship. Further, as indicated in leaked drafts of the current interim proposal, the threshold for the EU DST may cause unfair treatment, putting in-scope companies at a competitive disadvantage without objective justification.

Moreover, the DST may violate the long-held principle that taxes on multinationals should be profit-based, not revenue based. Taxing revenues, as opposed to profits, will also impose a significant compliance cost, requiring new processes and infrastructure to be established. The EU already has a revenue tax based on the location of users – the VAT. Consequently, both parties agree that the DST will undoubtedly lead to double taxation of multinational companies.

Finally, the European Tech Leader including Spotify, Zalando, and Booking.com also added another concern about the unclear proposal in defining user contributions to digital platforms as a tax base and reciprocal treatment from third countries. Thus, new companies will have difficulties to grow to scale and to attract capital investment for emerging technologies.

Proposed Recommendation

Given these many issues are arising from the EU DST Proposal, both US Chamber and EU tech businesses urge EU not to adopt this measure and refocus on reaching multilateral consensus with other leading economies within the OECD, rather than taking the unilateral action.

Sources: US Chamber, BNA, Tax Notes

 

 

Workshop For Corporates - "Fit For Future: A Refined Approach To Tax Risk Management"

This workshop will not only provide insights into the latest national and international developments in the field of analytics applied by governments, but will also allow for sufficient dialogue amongst participants and presenters alike to share best practices around designing a Tax Risk Management Strategy going forward.

How to manage Global Tax Controversy?
How to use Value Chain Analysis as a risk management tool?
How to Use Tax Technology to stay one step ahead of the tax authorities?

Tuesday 31 January, 2019

Time: 9.00AM - 6.30PM   London (UK)
Venue: De Vere Grand Connaught Rooms, London

Copyright © 2018
Transfer Pricing Associates BV.
All rights reserved.
 

H.J.E. Wenckebachweg 210
1096 AS Amsterdam
T: +31 20 462 3530
E: info@tpa-global.com
I: www.tpa-global.com