Big Tech requires to pay more tax, EU’s Gentiloni states

Big Tech needs to pay more tax, EU's Gentiloni says

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Big Tech needs to pay a “fair amount” of taxes in Europe, particularly as they are the “real winners” of the coronavirus crisis, a top European main informed CNBC Saturday.

His remarks come amidst a continuous rift in between the United States and the European Union over the tax of business such as Apple, Alphabet and Amazon.

“It is a major problem,” Paolo Gentiloni, European Commissioner for economics and tax, informed CNBC at the European House Ambrosetti Forum, acknowledging the trouble in getting rid of distinctions with the United States.

However, the previous Italian prime minister included that it was no longer possible “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 platforms are the genuine winners of this crisis.

Paolo Gentiloni

European Commissioner

In 2018, the European Commission, the executive arm of the EU, proposed a 3% digital levy, arguing that the tax system required to be upgraded for the digital age. However, the White House stated a digital tax was unjust as it disproportionately affected American companies.

At the time, the European Commission stated digital business, usually, pay an efficient tax rate of 9.5% — compared to 23.2% for standard companies.

However, in the wake of the Covid-19 pandemic, Big Tech has actually got an increase, with lots of customers depending on these business for teleworking, shopping and remaining linked.

“The giants of the digital platforms are the real winners of this crisis, from the economical point of view,” Gentiloni included. “We all experience this in our own lives.”

Meanwhile, federal governments remain in desperate requirement of extra financing and enforcing brand-new taxes is one crucial method of attaining this.

In this context, the EU is seeking to propose a brand-new digital tax in 2021 if settlements at the OECD-level collapse by year-end.

“If we will not have decent results at the global level, the European Commission will come out next year with our own a proposal,” Gentiloni stated.

In a blow to settlements, the United States took out of talks in June — raising doubts about any practical development this year.

Gentiloni stated there had actually been development at the technical level, however the upcoming governmental election in the United States was affecting the procedure.

“We are in an electoral year in the U.S. and I think this also has an influence,” he stated, including that, nevertheless, the EU required “to insist on the necessity of a global solution.”