The Polish prime minister Mateusz Morawiecki said yesterday that there should be no tax havens in Europe and that if there is no common European Union digital tax, individual member states will have to act alone. “The European Commission itself and the OECD consider some countries, like Cyprus and Malta – but lately even Belgium or Ireland, as countries which help multinational giants to avoid paying tax,” Morawiecki said.
According to Morawiecki, Poland was one of the countries raising the topic of a common digital tax at meetings of the European Council and that Poland was in regular contact with France and Germany about the issue. Morawiecki also said that, according to his sources, Austria was getting ready to introduce a digital tax despite the lack of EU consensus. “We want to do it together with all EU countries, but the Austrian example shows that, if there is no consensus, member countries will have to take this decision – I hope, not long from now – on their own, independently and with responsibility”.
Last year, the European Commission proposed an EU tax on the online revenues or large digital companies arguing that such companies sent profits through those member states with the lowest levels of corporate tax. An number of EU member states resisted this move as a result of which France and Germany proposed a watered-down version of the proposal at the end of last year.
At last Wednesday’s ECOFIN meeting, EU finance ministers rejected the Commission’s digital advertising tax proposal on the basis that there should be a global agreement on such a tax in order to protect the EU’s competitiveness. The arguments fir rejection focused mainly on the discussions at OECD level, highlighting the importance of having global, rather than simply EU agreement on such a tax.
The ECOFIN ministers did agree that discussion on the digital services tax would be discussed by the Council should the international initiatives to reach a global agreement fail. Malta’s finance minister, Edward Scicluna, said that “changes to production and consumption patterns due to digitisation may require a review of the current tax systems to avoid eroding the tax-base. But this change cannot be undertaken unilaterally,” he stressed.
At the meeting, the ministers approved a revised list of jurisdictions deemed to be non-cooperative on tax which list now includes those jurisdictions which are still deemed to be non-cooperative on tax matters, while other jurisdictions, that had acted on the initial concerns, were removed.
There is no doubt that as economies change and as electronic commerce increases, the tax system has to change to reflect these changes and to ensure that the tax burden in both fair and that tax revenue is not concentrated in jurisdictions different from those in which the underlying revenue it is in reality generated.