In the wake of COVID-19 pandemic, Big Tech has got a boost, with many consumers relying on these hi-tech companies for teleworking, shopping and staying connected. As Big Tech comes out as major gainers, the European Union is looking to tax the companies.
Paolo Gentiloni, European Commissioner for economics and taxation, told CNBC that this is a major problem. He said it was no longer possible to accept the idea that those giants, the winners of the crisis, are not paying a fair amount of taxes in Europe. “The giants of the digital platforms are the real winners of this crisis, from the economical point of view,” said the former Italian prime minister. “We all experience this in our own lives.”
The European Commission, in 2018, proposed a three per cent digital levy. The executive arm of the European Union argued that the tax system needed to be updated for the digital age. But the United States said the digital tax was unfair as it disaproportionately impacted American firms with the likes of Amazon and Apple. As such, this created a rift between the US and the EU. The tech companies’ dominance of the stock market is propelled by their unprecedented reach into our lives, shaping how we work, communicate, shop and relax. And that, as per New York Times, has only deepened during the pandemic, and as people shop more frequently on Amazon, click on a Google or Facebook ad or pay up for an iPhone, the companies receive a greater share of spending in the economy and earn ever larger profits.
Governments, due to the pandemic, are in desperate need of additional funding and as such are imposing new taxes. In this context, the EU is looking to propose a new digital tax in 2021, that is if negotiations at the OECD-level collapse by year-end. Gentiloni said if they do not have decent results at the global level, the European Commission will come out next year with its own proposal. He disclosed that there has been some progress at the technical level, but the upcoming US presidential election was impacting the process. “I think this also has an influence.” Gentiloni reiterated that EU was looking for a global solution.