The European Commission is putting on hold its plans to implement a new digital tax in the EU, a Commission spokesperson told reporters in Brussels. This follows the G20 countries' finance ministers this past week endorsing the OECD-led agreement to develop a new global minimum tax rate and new ways to share tax income from multinationals operating online.
The EU had previously been expected to present the digital tax plans on 20 July, but will now wait until the autumn. The proposal is a 0.3 percent sales tax on goods and services sold online by companies operating in the EU with an annual turnover of EUR 50 million or more, officials briefed on the plans told Politico recently. That makes the initiative more of a digital sales tax for all firms, rather than solely targeting the large American tech companies.
The EU has used the threat of its own digital tax to push forward the international negotiations on tax reform. It has said previously that the tax would be implemented only if no international agreement is reached. Several EU states, such as France and Spain, have already passed their own levies on large online firms, and the idea was for the EU tax to replace these. The digital tax is just one of several mechanisms under consideration to give the EU its own tax revenues and boost the money available for its economic recovery plans.
The Commission's announcement that the tax plans are delayed comes as US Treasury Secretary Janet Yellen is in Brussels to discuss the international tax deal. She has called for the EU to abandon its digital levy in favour of the international reform, or face possible sanctions from the US. Yellen is meeting with European Commission Executive Vice President and trade chief Valdis Dombrovskis on the matter, as well as finance chief Paolo Gentiloni. She will later have a meeting with EU finance ministers.
