The European Union needs a modern, stable regulatory and tax framework to appropriately address the developments and challenges of the digital economy. We therefore consider it appropriate for the digital economy to be taxed in a fair and transparent way with profits taxed where value is created.
The GSMA and ETNO have been positively engaged in the OECD debate on the taxation of the digital economy, and have contributed to the ongoing work at the G20 and OECD level to find a global solution that can support a reform of the international corporate tax framework and the challenges related to the digitalisation of the economy. We believe that the EU should continue to work with the OECD and focus on achieving multilateral consensus and a meaningful long-term and coordinated international solution as soon as possible, which would give businesses increased certainty and reduce complexity on a global basis going forward.
It is our view that a global agreement at the OECD level would help the EU to modernise the EU tax framework to better address the challenges associated with the digital economy. Should the OECD fail to agree on an international consensus, then working at EU level would ensure better level of harmonisation between Member States. To this end and in view of the acceleration of the digitisation of the economy, the taxation challenges of the new online economy should be incorporated in the existing taxation framework (as opposed to via the introduction of entirely new taxes) and the relevant existing regulations should accordingly be adapted in particular regarding the nexus.
If the EU does pursue the Digital Levy, we strongly recommend that any EU proposals should have a clearly articulated principled approach in a number of areas including scope and any departure from the arm’s length principle. Furthermore, a company’s appropriate tax liability should be based on the profit generated from the company’s business activities, not a company’s revenues. We would also encourage the EU to ensure that any unilateral DST introduced by EU Member States are repealed in full if an EU Levy is agreed and implemented.
For more information please contact:
Director, Government & Regulatory Affairs , GSMA