Key EU countries block draft of digital tax on tech corporations like Apple
This weekend, Sweden, Finland, Ireland and Denmark blocked a draft proposal of tax that would affect major tech corporations operating in the European Union.
Apple offices near Cork, Ireland.
The tax -- nicknamed "GAFA," for Google, Apple, Facebook, and Amazon -- is being championed by France, with the backing of European Competition Commissioner Margrethe Vestager, Reuters reported. Vestager has argued that a "global solution" is ultimately needed, but that if results are to come "in a reasonable period of time," Europe will have to lead the way with a harmonized tax.
France's National Assembly is voting today on a national GAFA tax, which would claim 3 percent from digital ads and other income sources for tech firms with revenues over 750 million euros, or about $842 million.
Of concern is the fact that tech companies often escape paying regular taxes, even as they and the demands on government budgets continue to grow. Apple for instance is known to have funneled billions in international revenue through Ireland, exploiting loopholes to minimize its global tax bills.
A 2016 European Commission ruling found that the Irish government had for years arranged preferential tax treatment, something illegal under E.U. law. Apple has already paid over $15 billion to comply with that ruling, though both it and the Irish government are working to appeal.
A close relationship with Apple could theoretically explain Ireland's decision to block a GAFA draft. New taxes could also affect other regional powerhouses, such as Sweden's Spotify, which is forecasting 2019 revenues of 6.35 billion to 6.8 billion euros.
Apple offices near Cork, Ireland.
The tax -- nicknamed "GAFA," for Google, Apple, Facebook, and Amazon -- is being championed by France, with the backing of European Competition Commissioner Margrethe Vestager, Reuters reported. Vestager has argued that a "global solution" is ultimately needed, but that if results are to come "in a reasonable period of time," Europe will have to lead the way with a harmonized tax.
France's National Assembly is voting today on a national GAFA tax, which would claim 3 percent from digital ads and other income sources for tech firms with revenues over 750 million euros, or about $842 million.
Of concern is the fact that tech companies often escape paying regular taxes, even as they and the demands on government budgets continue to grow. Apple for instance is known to have funneled billions in international revenue through Ireland, exploiting loopholes to minimize its global tax bills.
A 2016 European Commission ruling found that the Irish government had for years arranged preferential tax treatment, something illegal under E.U. law. Apple has already paid over $15 billion to comply with that ruling, though both it and the Irish government are working to appeal.
A close relationship with Apple could theoretically explain Ireland's decision to block a GAFA draft. New taxes could also affect other regional powerhouses, such as Sweden's Spotify, which is forecasting 2019 revenues of 6.35 billion to 6.8 billion euros.
Comments
France is definitely one of those passé government. Always against everything about globalisation. Yet now champion this ‘pretentious’ harmonized tax.
Kudos to those nations who dare to stand up against these obsoleted nations.
I don't think most people really realize this, but it's really just another TAX on the people. it's a round about way to tax people more money. See Corporations don't pay taxes. No, they pass those taxes right alone to YOU the customer that end up paying the taxes. So you would not only be paying Apple's taxes, but the normal taxes, the VAT tax you normally pay. You're paying Apple's taxes from Apple jacking up prices another 3-4% to cover that new unfair tax.
See the Politician generally looks good. They are going after that evil Apple or Google or the Oil company's and the end result in higher cost product. Higher cost GAS at the pump. They look good as you get screwed. It's another way to steal money from people without just coming out and saying that he/she wants to raise Taxes on you.
The effect on Apple for a tax like this would be minimal because in contrast to their hardware operations where they centralised taxation to places such as Ireland, their services businesses have generally been invoiced from the country in which the products are delivered.
Contrary to how some people choose to paint Apple as tax evaders, I personally believe both approaches make sense and are not contradictory: hardware expenses are deeply tied to R&D and manufacturing, it's fair to chalk up those expenses to the country which holds the IP being sold. Services however don't have that benefit, they are largely selling IP which is locally sourced, so taxation should happen locally.
This tax actually wouldn't have a big impact on Apple, it will however have a significant impact on Google and Facebook which, despite local operations and evidence of work being done locally, still invoice from foreign entities whenever possible.