On 3 September, Ecommerce Europe wrote a letter to all EU Financial Ministers ahead of the Informal Meeting of Economic and Financial Affairs Ministers on 7-8 September, regarding the European Commission’s proposals on the taxation of the digital economy and, in particular, in respect of the proposal to introduce a 3% digital services tax on revenues resulting from certain digital services (hereafter “DST”).
Through its 20 national e-commerce associations, Ecommerce Europe represents the interests of more than 75,000 companies selling goods and/or services online to consumers in Europe. Our mission is to strengthen and foster e-commerce in Europe at all level, in order to make it easier for online merchants to sell to consumers in the European Union, with a particular focus on SMEs, for which it is more complicated to sell cross-border.
First of all, Ecommerce Europe supports the EU’s ambition to take a leading role in the current debate on taxation of the Digital Economy, in order to achieve an international consensus and a long-term and coordinated international solution. However, we believe that the EU DST proposal will make this objective harder to achieve and we kindly request that you carefully consider the problems this proposal will cause in its current design.
We therefore submit that, if the EU DST proposal is pursued, at a minimum, it should be made less distortive by proposing the following amendments:
1) The proposal should introduce operating profit margin gateways to reflect different operating margins of different business models and different companies within sectors. This may also help to create a bridge to the longer-term solution pursued at OECD level.
2) The EU DST proposal should enable full tax credits (or at least deductions) so that European companies that already pay existing taxes can offset those (so not additive).
3) The EU DST proposal should include an explicit sunset clause in recognition to the interim nature of the proposed DST on the way to a new international solution.
In this context, and to make a constructive contribution to the ongoing discussions in Council, we provide you in appendix with proposed alternative wording on some of the articles of the Commission’s DST proposal.
We look forward to a constructive discussion and hope that you will remain open to the opinions of the wider e-commerce sector in this matter. This is a rapidly evolving sector, which can and does make a major contribution to the productivity of small businesses. We recognize the importance of an agreed reform of corporate taxation and are committed to contribute in the OECD process. We fear however that hasty changes could have a serious impact on its growth, and also on jobs and innovation in Europe.
We look forward to continuing constructive discussions to ensure that companies will be taxed in a fair and non-discriminatory way.
Click here to download the pdf version of the letter.