There has been a lot of debate recently at international, EU and national levels about how to tax global businesses to ensure that profits are taxed where economic value is created.
The focus of these efforts has recently been on the digital economy.
At EU level, the European Commission has also been trying to address the tax strategies of multinationals through a proposed harmonised set of rules to tax companies rather than leaving it to individual EU Member States.
Despite attempts to reach agreement, EU Member States have been unable to reach a compromise on its own proposals and the European Commission has since conceded that it will wait for progress at OECD level and revisit its proposals in 2020 if no progress is made.
This deadlock has led several EU Member States to introduce their own initiatives for national taxes on digital companies which would include ‘sunset clauses’ and expire if an agreement is reached at international or EU level. Such initiatives may, potentially, lead to double taxation and differing views of the transactions covered and have also increased tensions at the global political level (e.g. between the USA and France).
There have been concrete recent developments in the tax systems of Austria, Belgium, Czech Republic, France, Hungary, Italy, Poland, Slovenia, Spain and UK. All these countries have proposed, announced or already implemented some form of a digital services tax.
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