European Commission on taxing: “digital sector must play fair and pay fair”

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Current tax systems stem from the time that computers, let alone internet, did not exist. This is the reason that Algirdas Šemeta, the Commissioner for Taxation, Customs, Statistics, Anti-Fraud and Audit, wants to install a High Level Expert Group on Taxation of the Digital Economy.

The Expert Group will consist of no more than seven members, all of whom are yet unknown but it is likely it will be chaired by a former minister of finance. The task of the Expert Group is to examine the best ways in how the digital economy can be taxed. The Expert Group should still commence on its assignment before the end of this year, and is expected to deliver a report on its findings half way through 2014.

The Commission realises that the digital economy is an important vector in achieving economic growth and stresses that taxes should not form a hindrance in achieving this. However, tax evasion is still a stringent problem and the Commission feels that it is only fair if the digital sector contributes its share to sound public finances. It stresses the need for a comprehensive approach to taxing the digital economy in order to protect Member States’ tax bases and ensure that the principle of fair taxation is not undermined in the EU.

“Today’s tax systems were conceived in a pre-computer age. So it is no surprise that they often clash with the modern, digital economy. Taxation must not be an obstacle to all that is good about the digital revolution. Yet, we must also ensure that the digital sector plays fair and plays fair. The challenges linked to taxing the digital economy are immense and there are no ready-made answers. Therefore, we need deep, informed and focused reflection on this issue within the EU, to ensure that the next steps we take are the right ones” the Commissioner said.

For the press release on this issue, please click here.

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