March 21 (UPI) — The European Union proposed aggressive new rules Wednesday designed to change the way tech companies are taxed.
The European Commission, the legislative branch of the EU, said in a statement the rules would “ensure that digital business activities are taxed in a fair and growth-friendly way in the EU.”
One proposal is an interim 3 percent tax on revenue generated online and the sale of digital user data.
Companies with global revenue of $920 million or more would be affected by the new taxes — including tech giants like Google, Facebook and Apple.
Several tech companies, notably Apple and Amazon, have faced growing tax issues in Europe, where regulators are stricter in matters involving privacy and data sharing. The commission ruled in 2016 that Apple owes Ireland $16 billion in unpaid taxes, its largest tax ruling ever against a single company.
The commission’s proposal Wednesday said digital companies have been taxed at half the rate of traditional industries — and since nine of the world’s top 20 companies’ services are digital in nature, the EU’s tax rules need to be updated.
The EU also recommends that member states be allowed to tax profits generated in their territory, even if a company does not have a “physical presence there.”
“The new rules would ensure that online businesses contribute to public finances at the same level as traditional ‘brick-and-mortar’ companies,” the commission said.
Most European business pay an average of 24 percent in corporate taxes, compared to less than 10 percent by digital companies.
“The amount of profits currently going untaxed is unacceptable,” commission Vice President Valdis Dombrovskis said. “We need to urgently bring our tax rules into the 21st century by putting in place a new comprehensive and future-proof solution.”
