European taxation of GAFA

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A huge subject since some months, the debate on a european taxation of digital multinationals, the « GAFA » (Google, Amazon, Facebook, Apple) aka « equality tax » has started.

CONFRONTED TO THE RIVALRY OF THE USA, CHINA AND JAPAN, THE EUROPEAN UNION NEEDS TO TAKE DECISION ABOUT THESE DIGITAL GIANTS’ REVENUES REALIZED IN EACH COUNTRY, AND NOT ABOUT THEIR AFFILIATES’ PROFIT, SITUATED IN STATES WITH LOW FISCALITY.

It’s the French Finance Minister Bruno Le Maire who, from the beginning of September, fights to convince his German, Italian, Spanish, Austrian, Greek, Slovenian, Bulgarian, Portuguese and Romanian counterparts to sign a shared letter requesting this digital taxation.

The idea is simple : today, GAFA challenge their imagination to escape taxes, or at least, to decrease them, declaring their profit in their subsidiary companies in the least taxed European countries. Therefore, the government would like to submit them to a European taxation, country by country, based on their revenues.

On the other hand, Bruno Le Maire faces the hesitation from 8 member states and Ireland’s hostility, known to have a very favorable taxation for digital companies. He’s accompanied by Luxembourg, Malta and Cyprus.

According to European’s deputies report, the European Union would have « lost » 5,4 billion of dollars of taxes only by Facebook and Google between 2013 and 2015. It seems that these digital giants, whose most activities are based on intangible assets and immaterial data, would pay on average less than the half of taxes paid by traditional entreprises.

In United Kingdom, for example, Amazon pays eleven times less taxes than its rivals; also, in Ireland, Apple paid, in 2014, 0,005% of taxes, against 12,5% officially applicable (already one of the lowest in Europe).

This legislative proposal will officially be presented in spring 2017, and will have to be approved by  the EU member states and the European Parliament. They will have to abord the « Internet platform » regulation subject, cybersecurity and the combat against terrorist digital content.

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