Germany, France aim to keep digital tax alive

France and Germany aim to keep digital tax alive with new proposal: source

IRELAND'S EU FURY: Dublin set for TAX WAR with Brussels - ‘We have STRONG concerns’

The two technology giants are among Ireland's biggest employers and pay significant corporation tax in the country.

Companies with big online advertising operations like Google and Facebook would be most affected by the Franco-German proposal as they make up the majority of the market in Europe.

France's finance minister Bruno Le Maire has attempted to play down concerns some countries, including Ireland, might have.

The ministers examined a joint declaration by the French and German delegations, and the presidency recommended that the Council working group continues working on the basis of the latest presidency compromise text and the elements proposed by France and Germany, with the aim of reaching an agreement "as soon as possible".

He said: "Like any European compromise, some will be disappointed".

The Irish position is that any major changes to global taxation should be agreed through the Organisation for Economic Cooperation and Development (OECD) level - where the United States and other big non-EU countries are also represented.

The proposal made by France and Germany at a meeting of EU finance ministers on Tuesday envisages a 3 percent tax on European advertising sales by digital companies, rather than the broad tax on the total revenues of large digital firms originally suggested. "I promise to be constructive and I'm ready to look at the proposal, but I still have serious concerns with it", said Finnish Finance Minister Petteri Orpo.

In a joint statement, Germany and France stress, according to information from the European Union circles, now their "determination, a fair and effective tax on big digital companies".

"We expect the OECD will reach an agreement by 2020 on proposals aimed at tackling the challenges raised by the digitalisation of the economy and tax avoidance".

The European Commission had originally proposed to charge for digital companies such as Google and Facebook with a global annual turnover of at least Euro 750 million as well as an online turnover of 50 million euros in Europe, three percent income tax.

Under this proposal, the tax would not come into force until January 2021, and only if no worldwide solution has been found. Paris and Berlin proposed that it expire by 2025 in a move aimed at appeasing concerns that it may become permanent.

The new proposal, which requires unanimous backing by the European Union member states, is set to be formally put for approval by ministers in March.

"In case such an global solution has been agreed and subsequently translated in European Union law before 1st January 2021, the implementation of this directive will be withdrawn by a majority vote".

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