PARIS, France - Dealing with low taxes received by tech giants like Amazon and Google, under current international rules, many EU countries are now looking to clamp down on the taxation of such companies.
In a joint letter, finance ministers of countries like France, Germany, Italy and Spain have said that they want digital multinationals to be taxed in Europe based on their revenues, rather than only profits.
The push initially came from France, but in its bid to clamp down on such companies, France found support from other countries that have expressed frustration at the low taxes they receive under current international rules.
According to reports, these companies are often taxed on profits booked by subsidiaries in low-tax countries like Ireland - even though their revenue is originated from other EU countries.
The four ministers wrote in a letter, “We should no longer accept that these companies do business in Europe while paying minimal amounts of tax to our treasuries.”
The letter was reportedly signed by French Finance Minister Bruno Le Maire, Germany’s Wolfgang Schaeuble, Italy’s Pier-Carlo Padoan and Spain’s Luis de Guindos and was addressed to the EU’s Estonian presidency with the bloc’s executive Commission in copy.
The ministers have urged the Commission to come up with a solution creating an “equalisation tax” on turnover that would bring taxation to the level of corporate tax in the country where the revenue was earned.
First reported by the Financial Times, the letter by the ministers stated, “The amounts raised would aim to reflect some of what these companies should be paying in terms of corporate tax.”
Further, Le Maire, Schaeuble, Padoan and de Guindos have said they wanted to present the issue to other EU counterparts at a September 15-16 meeting in Tallinn.
According to reports, the EU’s current Estonian presidency has scheduled a discussion at the meeting about the concept of “permanent establishment,” with the aim of making it possible to tax firms where they create value, not only where they have their tax residence.