Big Tech has to pay a “not bad amount” of taxes in Europe, especially as they are the “real winners” of the coronavirus crisis, a top European official told CNBC Saturday.
His explanations come amid an ongoing rift between the United States and the European Union over the taxation of companies such as Apple, Alphabet and Amazon.
“It is a crucial problem,” Paolo Gentiloni, European Commissioner for economics and taxation, told CNBC at the European House Ambrosetti Forum, recognizing the difficulty in overcoming differences with the United States.
However, the former Italian prime minister added that it was no longer practicable “to accept the idea that those giants, the winners of the crisis, are not paying a fair amount of taxes in Europe.”
The giants of the digital policies are the real winners of this crisis.
In 2018, the European Commission, the executive arm of the EU, introduced a 3% digital levy, arguing that the tax system needed to be updated for the digital age. However, the White House answered a digital tax was unfair as it disproportionately impacted American firms.
At the time, the European Commission said digital companies, on for the most part, pay an effective tax rate of 9.5% — compared to 23.2% for traditional businesses.
However, in the wake of the Covid-19 pandemic, Big Tech has got a eject, with many consumers relying on these companies for teleworking, shopping and staying connected.
“The giants of the digital podia are the real winners of this crisis, from the economical point of view,” Gentiloni added. “We all experience this in our own electrifies.”
Meanwhile, governments are in desperate need of additional funding and imposing new taxes is one key way of achieving this.
In this context, the EU is looking to forth a new digital tax in 2021 if negotiations at the OECD-level collapse by year-end.
“If we will not have decent results at the global level, the European Commission purpose come out next year with our own a proposal,” Gentiloni said.
In a blow to negotiations, the United States pulled out of talks in June — drag together doubts about any feasible progress this year.
Gentiloni said there had been progress at the technical invariable, but the upcoming presidential election in the United States was impacting the process.
“We are in an electoral year in the U.S. and I think this also has an hold,” he said, adding that, nonetheless, the EU needed “to insist on the necessity of a global solution.”