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EU Digital Economy Tax Gains Traction From The US

The digital economy tax proposal put forwarded by the EU Commission, including a 3% sales tax on certain transactions and a virtual permanent establishment reform, is held back by the United States. The US indicates to bring the EU proposal before the tribunal of the World Trade Organization.

Pressure from the US

The EU digital proposal, if adopted, will mainly address the tech giants (mostly from the US), such as Amazon, Facebook, Google and Apple. In addition to restrictions from the WTO, the US sees the proposal as an aggression to the tech industry.

Worries from the Internal Union

The proposals are hindered within the Union as well. Consensus approval of the European Parliament and all member states are required to enact the proposal on the Union level, but this is not easy to achieve. Smaller countries like Ireland, as well as businesses in some other countries, are worried about the potential effect of the policy. “The proposal for an EU digital tax comes at an inopportune moment because it increases transatlantic tensions…with this proposal, the European Commission risks exacerbating the trade conflict with the USA,” said Joachim Lang, managing director of the BDI industry association.

Sources: TPA GlobalReuters, Handelsblatt Global