US to temporarily exempt EU, 6 other economies from metal tariffs

26 March, 2018, 02:33 | Author: Ann Santiago
  • EU Commission to unveil plan for tax on tech company revenue

The Trump administration has bound the EU's tariff exemption to the condition of launching talks to tackle "trade irritants", European Commissioner for Trade Cecilia Malmström said Thursday. The proposal, which had been rumored previously, would require companies to pay taxes throughout the EU, rather than directly from where they place their European headquarters. "The current legal vacuum is creating a substantial shortfall in the budgetary revenues of our member states".

The Commission estimates that €5 billion in revenues a year could be generated for member states if its proposed interim tax is applied at a rate of 3%.

It means that firms like Amazon EU and Microsoft, which are domiciled in Luxembourg but whose services are used around the world, would pay taxes in several countries in addition to Luxembourg.

There have been widespread claims in recent years that the likes of Facebook and Google pay too little tax. The second proposal calls for an interim tax which covers digital activities that now escape tax altogether in the EU.

The question for Irish opponents of the tax plan in Brussels this week: why step ahead of the OECD when it has been undertaking effective and painstaking work under the base erosion and profit shifting project to close loopholes between national tax systems being exploited by multinational companies on global revenues?

Smaller European digital start-ups and companies, such as Netflix, which depend on subscriptions will be spared from paying the EU's digital tax.

However, the European Union is expected to face stiff opposition from within its own ranks to further proposals which would ensure that firms paid corporation tax on profits made in the country where revenues were generated.

The Commission said its "preferred long-term solution" is a tax on digital profits where they are generated, even if companies do not have a physical presence in the country.

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The European Commission said that it has "proposed new rules to ensure that digital business activities are taxed in a fair and growth-friendly way in the EU".

Europe is moving aggressively to raise billions more in tax from big tech companies such as Google and Facebook.

European Union leaders on Friday said they would maintain a threat to hit the U.S. with counter-measures - that include tariffs on Harley Davidson motorcycles and bourbon - as long as a metals tariffs exemption granted by Washington remained temporary.

A 3% tax on revenue was proposed in order to gain more tax income from these companies.

In a common statement on Wednesday, France, Germany, Italy and Spain "welcomed" the commission's proposal and said that "the next step will be to analyse the details in depth".

The EU grew increasingly confident that President Donald Trump would grant Europe a last-minute exemption from punishing metals tariffs later Thursday as a top U.S. official said a interim deal was clinched. Although the EC said the tax is not specifically aimed at USA companies, the biggest digital companies are American.

Moscovici sought to reassure that "these proposals are neither a response to a French request nor a response against the United States".



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