Commission digital tax proposal: tax rules need to enter 21st century

The European Commission has presented proposals for new rules to tax the activity of businesses in the digital economy. It has proposed both a short-term solution to make sure large digital companies pay at least some tax where they have customers, and a long-term solution that aims to update the tax system to respond to the challenges of a digitalised economy.

Oxfam’s Policy Advisor on Tax, Johan Langerock, said:

“The Commission’s digital tax proposals will help bring the European tax system into the 21st century. Technology is fundamentally reshaping every single industry and how they do business – this is not just about a handful of big tech firms, technology changes the way industries work, and the tax system needs to be updated accordingly.

“The Commission's long-term proposal recognises this challenge, and the proposal could support both richer and poorer countries who are all currently losing out on tax revenues.

“The short-term measures proposed by the Commission – including a 3-percent turnover tax on tech giants – target only a couple of big companies, and will not prevent businesses from systematically dodging billions of euros in taxes every year.

“EU governments must avoid the temptation to focus all their energy on short-term wins but work together to deliver the fundamental reforms outlined in the Commission’s long-term proposals if they are to ensure the tech industry pays its fair share of tax. 

“It is important that the EU moves on digital taxation, and it must work with governments on a global level to make sure developing countries also get a say in the tax rules for the digital economy.”

Notes to editors: 
  • Oxfam’s Policy Advisor on Tax, Johan Langerock, is available in Brussels for interviews in English, French and Dutch.
  • Read Oxfam’s analysis of the Commission proposal and useful background information.
  • For the short-term, the European Commission proposes a tax for digital companies based on their revenue and the location of the companies’ users. It suggests a 3% turnover tax for large tech companies with a global turnover of at least €750 million and EU revenues of more than €50 million.
  • The new rules are a response to tax avoidance strategies where companies set up headquarters in states with a low corporate income tax, rather than paying tax where they make their profits. They would mainly apply to big tech firms, including the so-called GAFA (Google, Apple, Facebook, Amazon).
  • The proposals were presented a day after G20 finance ministers discussed key issues affecting the global economy, including the international tax system, at their meeting in Argentina. Last week, the US warned the EU about any unilateral move regarding the taxation of tech giants, without proposing a concrete timeline or solutions to address the issue.
Contact information: 

Florian Oel | Brussels | florian.oel@oxfam.org | mobile +32 473 56 22 60

For updates, please follow @Oxfam and @OxfamEU