In the criticism of European laws in the US, Republicans and Democrats can still agree. The digital tax discussed in the EU and pushed by the Austrian EU Presidency on certain businesses of large online companies discriminates against US companies, according to a joint letter to European Commission President Jean-Claude Juncker and EU Council President Donald Tusk.
Republican Senate Finance Committee chairman Orrin Hatch and his Democrat counterpart Ron Wyden criticize the EU proposal as „designed to discriminate US companies and undermine the international tax treaty system“. The introduction would create a transatlantic trade barrier and lead to double taxation of multinational companies.
Reference to ongoing trade talks
It was „a disturbing news“ that the Austrian EU Presidency urges that a basic agreement be reached in the coming weeks, because there are still so many questions open. In particular, the Digital Tax proposal contradicts the long-standing practice of levying taxes on profits rather than on sales. In addition, there is already a VAT-related tax on VAT anyway, so the new tax will lead to double taxation.
Digital taxation would complicate talks on trade facilitation between the EU and the US. „We urge the EU to abandon this proposal, and we urge EU member states to delay unilateral action,“ and instead seek to seek a consensus on new taxes on digital business in the OECD, write the two MEPs.
Three percent on sales
The European Commission had proposed that three percent of the taxes be levied on sales made by large Internet companies with more than € 750 million in sales worldwide via personalized advertising, brokerage on platforms or the sale of user data. Austria, but also France and some other countries hope to offset the currently very low corporate tax rate of internet giants like Google and raise taxation to the average level of industrial companies. However, there are still some countries in the EU that are skeptical.