Nations Move Toward Imposing ‘Digital Taxes’ On Big Tech
Governments around the world are setting their sights on putting a variety of digital taxes on Big Tech giants.
Here’s a look at some of the latest developments:
France and the European Union
France has long been angling to levy digital taxes, although such moves have become a bone of contention with the United States and have faced significant delays.
The U.S. Treasury argued last year that one such French tax plan was discriminatory and unfairly targeted U.S. digital companies, and France backed down after America delayed tariffs on $1.3 billion of French goods.
But this fall, pressure has begun to build in the European Union to simply impose digital taxes even without an agreement with the United States. Margrethe Vestager, the EU’s commissioner for competition, said that “if no effective agreement can be reached by the end of 2020, the EU should be willing to act alone.”
Bloomberg reported this week that the French Finance Ministry has now told Big Tech companies such as Facebook and Amazon that they will be on the hook for digital taxes starting this month. The government said it would raise $480 million this year from such taxes.
Since mid-2020, Indonesia has been collecting a 10 percent value-added tax (VAT) on digital products and services from internet-based firms.
The country said 16 digital companies had paid a total of $21 million in VAT as of October. But so far, Indonesia has not actually taxed Big Tech companies’ incomes.
However, Reuters reported that the country might pursue a plan to tax technology companies on their Indonesian income, even if international organizations such as the Organization for Economic Cooperation and Development (OECD) fail to reach an agreement on digital taxes. Talks led by the OECD on digital and cross-border taxes stalled earlier this year.
Indonesian Finance Minister Sri Mulyani Indrawati said that based on VAT payments, the country’s tax office can estimate how much income digital firms make within Indonesia.
“Of course, we hope for a global taxation agreement, but it does not mean we cannot collect the taxes,” Indrawati said, as quoted by Reuters.
Closer to home, Canada said it plans to impose a tax on corporations providing digital services — such as Facebook and Google — starting in 2022.
According to Reuters, Canada’s finance department said it will move forward with that plan until there is an international agreement over digital taxes.