Germany, France, Spain, Italy ask for tax on revenues of digital giants

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In a joint letter by the finance ministers of Germany, Spain, France, and Italy desires the digital multinationals such as Google and Amazon to be levied in Europe on the basis of their revenues instead of just profits as now.

France is directing a drive to tighten up on the taxation of such firms but has received backing from other countries as well upset at the low tax they obtain under existing international regulations. At present, such firms are mainly levied on profits received by subsidiaries in countries with low tax such as Ireland although the revenue initiated from other EU countries.

The letter stated, “We should no more agree that these firms do commerce in Europe while compensating nominal tax amounts to our treasuries.” The letter—signed by Finance Minister of France, Germany, Italy, and Spain Bruno Le Maire, Wolfgang Schaeuble, Pier-Carlo Padoan, and Luis de Guindos, respectively—was addressed to the Estonian Presidency of EU with the Executive Commission of the bloc in the copy.

They asked the Commission to find a solution for it making an “equalization tax” on earnings that would get taxation to the corporate tax level in the country where the income was earned. The Minister further in their letter mentioned, “The sums raised would intend to imitate some of what these firms should be forfeiting in terms of corporate tax.” Also, the minister stated that they desired to present the matter to other EU equivalents at the meeting scheduled on September 15–16 in Tallinn.

The existing Estonian presidency of EU has planned a conversation at the conference about the notion of “permanent establishment,” with the objective of making it feasible to tax companies where they generate revenue, not just where they have their tax dwelling. France has intensified pressure for EU tax regulations after experiencing legal setbacks attempting to receive compensations for levies on activities in the country.

In July, a French court directed that Google, as a part of Alphabet Inc. now, was not accountable to pay $1.3 Billion (EUR 1.1 Billion) in back taxes as they don’t have a “permanent establishment” in the country and managed its businesses in France from Ireland.

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