The EU still hopes to find an international answer to tax policy changes for internet based companies, a senior official said.
“We are now embarking on discussions at the EU level, but that does not mean that we’ve given up on the international discussion, or that we in any way withdraw from the international discussion,” said Bernardus Zuijdendorp, head of the European Commission’s Company Taxation Initiatives unit.
His comments come after the Organization for Economic Cooperation and Development was seen as coming out ahead of the European Union with a milestone report in which it gave advice to countries seeking interim measures to tax digital businesses. Five days later, the European Commission on March 21 proposed a 3 percent turnover tax on large internet companies such as Amazon.com Inc., Google Inc., and Facebook Inc., part of two-pronged corporate tax reform legislation outlining interim and long-term tax treatments for digital enterprises.
The European Commission’s proposal to tax digital companies in fact should be seen “as a contribution” to the OECD’s efforts in this area, Zuijdendorp said.
The commission “fully recognized the close link” between the pending OECD efforts to tax digital companies and its own “comprehensive solutions,” he said at an April 13 session of a conference organized by the American Bar Association in Amsterdam.
‘Multilateral’ is Preferred
The 28 EU member nations must approve the turnover tax proposal before it becomes law. Ireland, where a number of large U.S. internet companies are based, insists the EU must wait for a global consensus from the OECD before the interim turnover tax can be approved.
Ireland has resisted some of the EU’s tax reform proposals. It has a corporate tax rate of 12.5 percent.
“A multilateral solution” in the OECD “is still our preferred solution, but a European solution is also a multilateral solution of sorts,” said Zuijdendorp.
The European Commission official also downplayed the risk of “fragmentation” between the various proposals, noting that commission officials carefully looked at the OECD’s interim report and “we’re very aligned with that.”
‘Roll Up Our Sleeves’
The divergent positions of OECD countries on an approach to digital companies is becoming a distraction from the real issue at hand, said David Bradbury, head tax policy and statistics at the OECD’s Centre for Tax Policy and Finance.
A multilateral approach based on consensus is going to be a “challenge,” he said.
“But I guess rather than spending too much time reflecting on how hard that might be, we just want to roll up our sleeves and see what we can do about that,” he said at the conference.
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