Technology company chiefs have warned that an Electronic services Taxation Suggested by the European Union would hinder innovation and hurt economic growth.
Johannes Bahrke, the spokesman in the EU’s executive Commission, defended the proposal Tuesday, saying it intends to make a”level playing field” for businesses whether they are based outside or in the EU.
“Our proposal remains fully educated on the most elementary principle of corporate taxation that is that profits should be taxed where the value is created,” he said.
The European Commission introduced its strategy in March, insisting that EU member nations should be in a position to tax firms that make profits on their land even if they are not physically present.
The proposal was viewed as a method of earning tech giants such as Google and Facebook pay additional taxes.
Brussels asserts that corporate tax rules haven’t kept up with the development of this borderless digital marketplace which makes it possible for some companies to make massive profits in Europe nevertheless pay very little tax.
In the EU, overseas firms like Amazon, Google and Facebook pay exactly what tax they owe from the country where they have their regional foundation – usually a minimal tax haven including Ireland.
Britain, which is scheduled to leave the EU on March 29, declared its own tech taxation on Monday.
Treasury leader Philip Hammond stated the proposed tax might aim UK-generated earnings of particular digital platform business models. Hammond, such as the EU, stated he’d prefer an global alternative.
In their letter, technology CEOs warned that the EU proposal”will have a disproportionate effect on European companies, leading to unfair treatment”
They also said the tax is going to be hard to execute, could result in double taxation for some companies and may cause retaliatory measures from other nations.
Addressing EU finance ministers ahead of a November 6 meeting, the letter urged them”not to adopt a step which would cause material harm to economic development as well as innovation, investment and employment across Europe.”