Digital Giants or Giant Tax Evaders?
An ad on Facebook complaining about Facebook not paying taxes on ads. We liked that idea. And lot of other people too. They responded in huge numbers, often pretty upset and angry.
The problem, in the fewest of words, is that national tax systems are fragmented and outdated whereas digital companies are agile and international. The good news is that more and more national leaders understand that modernization of the European tax system is much needed. We see a coalition of ten countries in the Council, and just last week, a digital summit on exactly this issue has been convened.
Why not use this pressure for an overhaul of EU corporate tax system as we know it? For too long, multinational companies, digital or analogue, have been exploiting differences in national taxation regimes. Therefore, initiatives to tax digital giants are welcome but should fit in a structural approach. What we really need is a new standard for corporate taxation in Europe, a CCCTB.
Exactly with that message I visited Paris with my colleague Alain Lamassoure. We had a discussion with Finance minister Bruno Le Maire who put forward his plan for a quick fix on taxing digital giants. Of course, we appreciate that the minister wants prompt action on digital companies but we stressed that his plan has to be a step towards a European corporate tax base.
Last Friday I started with a pretty exciting ride on a motorbike from the airport to the Elysées — circumventing the Paris morning traffic. Besides the discussion with Mr Le Maire, we had a breakfast at the Elysees, informal discussions with colleagues and a working lunch with the OECD.
Last Wednesday, I went to The Netherlands, where we visited both the House of Representatives and The Senate. As a former Member of the Parliament (2007–2010), it was a sort of homecoming for me. But there were differences and concerns still, for instance on the equivalent implementation of the directive in the 27 future EU countries. Nevertheless, I sensed that Dutch MPs and stakeholders understood that they can only influence the European discussion when they engage in it constructively. Furthermore, we had a meeting with the State Secretary of Finance. In spite of some differences of insight, we both shared that the Netherlands have to take a stand against tax avoidance and address the tax challenges of the digital economy.
In the meantime, in Brussels, MEPs have tabled their amendments to my proposals this week, and we can enter the negotiation phase shortly. But a lot of work remains to be done to rally all relevant national and European players behind a much needed tax reform.
The good news is that I see the appetite for reform growing.