On 4 December EU Finance Ministers will meet again to discuss the Digital Services Tax proposal. It is a 3% levy on revenues resulting from certain digital services. In light of this meeting, on 20 November, Ecommerce Europe sent a letter to EU28 Finance Ministers to warn them about the likely negative consequences of such a proposal and to urge them to seek a global solution instead of focusing on this interim EU measure.
According to the latest compromise text from the Austrian Presidency, if an agreement is reached, the Member States would have to transpose the Directive into national law by the end of 2021 so that the Digital Services Tax can start to apply as of 2022. The proposal also requires the European Commission to prepare a report by the end of 2020 on the progress made at the OECD level in terms of solution to tax the digital economy. If enough progress has been made, the Commission could then propose to postpone or repeal the DST proposal. The Austrian Presidency proposes that the DST expires once a global solution has been reached or by a specific date yet to be agreed.
Ecommerce Europe reiterated its strong concerns about this proposal by drawing attention to the fact that important legal and substantive technical issues have not been properly addressed until today, in particular the issue of low-margin and loss-making companies which are still within the scope of the DST. The letter also warns that the legal basis used by the European Commission to justify its action is questionable.
Ecommerce Europe remains convinced that such a tax will have negative consequences for European businesses, specifically SMEs, and ultimately EU consumers, who will essentially carry the burden of the DST.
The letter also expresses Ecommerce Europe’s opposition to unilateral solutions, both at EU and Member States level. It also calls on the EU Finance Ministers to take into consideration the fact that the OECD is the only appropriate forum to discuss and define how to tax the global economy in a fair and non-discriminatory way.