(Photo: REUTERS/Joachim Herrmann)
Germany, Ireland, Finland, and other Nordic governments are cautious about a proposal from the European Union to tax the revenues acquired within EU's territory by big technology companies.
A European Commission proposed a 3 percent tax on technology companies like Google, Facebook, And Amazon, all of which earned a significant percentage of their profits with the EU. The said commission presented its proposal in March this year. Also included in the proposal was a suggestion to tax revenues earned within the EU even if firms have no facilities operating in the continent.
Before the planned EU tech tax could be implemented, it is required that all EU nations give their unanimous "yes." This means that even if there is one country that opposes the proposal, the commission cannot go ahead and implement the 3 percent tax.
Out of the 28 members of the EU, France and Austria have both given their yes. Some nations remained skeptical with most of them remaining cautious over concerns on retaliatory tariffs from the United States.
EU officials believed Germany's Finance Minister Olaf Scholz was apprehensive because the proposed scheme may result in higher tariffs on cars that the country exports to the United States. Germany can suffer retaliatory tariffs from its international partners, not just the United States, Reuters noted. The country may also find itself at the receiving end of the proposed 3 percent tax in the long run due to its own digital innovations.
Aside from fears of retaliatory tariffs and losing revenues, Ireland, meanwhile, thinks that EU's proposal will result in tech tax imposed unilaterally which could breach the principles of free trade. Irish Finance Minister Paschal Donohoe believed the most diplomatic way is for the proposed tax to be implemented on a global scale. Finnish Finance Minister Petteri Orpo echoed the same opinion.
Elsewhere in the continent, other Nordic governments believed the planned tech tax, whether imposed unilaterally or globally, could suppress the very own technological innovations within European countries.
France is a strong supporter of the proposal and has been campaigning for other EU states to agree on the scheme. To ramp up their decision-making, French Finance Minister Bruno Le Maire suggested a "sunset" clause that will cover the planned revenue tax during a meeting with EU members in Vienna on Sept. 7. The clause states that the 3 percent tariff will be automatically voided as soon as nations achieved consensus on tech tax on a global scale.
The French official would want other EU states to vote "yes" sooner before the elections in May according to Bloomberg. Europeans, apparently, have been complaining as to why big tech companies pay lower taxes within the continent compared to smaller companies operating in Europe.
As for concerns that the United States might interpret the planned EU tech tax as a direct attack, Le Maire told CNBC that Washington should not think of it this way because it was the Trump administration that first targeted European imports with tariffs. In June, the United States imposed levies on steel and aluminum imports from the EU. The latter delivered counter-levies in return.
Le Maire added that the EU tech tax is being considered on the basis of fair taxation that should be implemented at an international level.
