Large tech companies will pay a tax for doing business in EU after the European Commission has proposed that they should also be a subject of taxation like the rest of the business.
Brussels wants the tax to be introduced by the end of the year. As a start at 3% on the turnover until new European legislation is adopted, dealing with the equalizing of the status of Internet businesses with that of other businesses.
If the idea is supported by European countries and legislators whose approval is not 100% guaranteed, the new taxation will apply to large companies with annual revenues (worldwide) of over €750 million and taxable revenues in the EU of over €50 million.
About 150 large companies will come under the new Internet impost, including Facebook, Apple, Microsoft, Amazon, Twitter, as well as international sites offering hotel, transport and other booking services.
Activities that should be charged are: profits from data processing, user social platforms and other online services such as streaming sites that are paid and other content. Facebook, Viber, Twitter and other social networks which publish advertisements in exchange of the services that they provide free of charge for consumers, as well as the information collected from their profiles, will also be taxed.
However, in order to enter into force, the legislation changes must be supported by the European Parliament and by all 28 Member States which are divided on this issue.
Larger European countries accuse technological companies of paying too small taxes, taking advantage of their ability to open their offices in countries such as Ireland and Luxembourg where the taxation levels are lower than the rest. The proposal is a short-term measure before Brussels can find a way to impose taxation on companies on the basis of where they operate.
The technology industry also expressed its concerns. According to the sector, it is incorrect to tax income as this will particularly affect companies with lower margins such as Amazon.
By 2017 Bulgaria was the country with the lowest corporate tax in the EU, but with the changes coming, Hungary took this place. However, US companies continue to prefer Ireland, where Google and many other technology companies have positioned their European headquarters. The corporate tax rate in the country is 12.5% for the income from trading and 25% of revenues from other sources.
