Key EGDF positions on the EU digital levy
- The EU should focus on supporting OECD efforts on building a global framework for digital corporate taxation: EGDF underlines that in order to fight the fragmentation of global digital markets, global solutions are needed for digital taxation instead of regional, national or sub-national ones. In a worst-case situation, no international solution is achieved through OECD and overlapping national and international corporate taxation rules will form a significant barrier of entry to global digital markets. Consequently, in principle, EGDF strongly encourages the Commission to continue supporting OECD efforts to build a coherent global framework for corporate taxation. Only when it is clear that the OECD initiative will fail, the Commission should introduce a coordinated European approach. In any case, the EU should not build national or European digital corporate taxation frameworks on top of the OECD one.
- The design of any new tax system has to follow principles of privacy by design and default: It is essential that the Commission closely follows the GDPR principle of data minimisation while drafting any new digital taxation proposal. For example, only one piece of evidence on the consumer’s location and only aggregated country-level location data should be transferred to third parties in the value chain for taxation reasons. Furthermore, it is essential to remember that personal data itself should not be seen as an intangible taxable asset from the European perspective.
- A future proof taxation system does not differentiate digital and non-digital businesses: The European Commission should abandon its efforts to arbitrary ring-fence digital economy from the rest of the economy for corporate taxation purposes. The Commission should be careful not to hit European digital companies with significant administrative red tape and new taxes while building taxation instruments targeting large online platforms acting as gatekeepers in the digital markets.
- Building a fair taxation system encouraging EU member states to invest in building a better future for humanity: It is crucial that the countries that have made the success of these companies possible by their public investment also receive the clear majority of the corporate tax income.
- Game developers, not players, create the value: The real value of digital games is the digital content, technology and business model that a game developer studios creates and supports. European game developers studios employ thousands and invest millions to create, support and improve their games. They, and not their users, are the ones that create the value.
- Improving B2B VAT framework is the way forward: Instead of building a new corporate taxation instrument, specifically increasing the cost of digitalisation, the Commission should explore the possibility of scaling up the already existing national B2B VAT system to the European level and possibly using the already existing tool for B2C VAT tax reporting to reallocate B2B VAT revenue to other member states or to the EU budget.
The full position paper can be downloaded from here: http://www.egdf.eu/wp-content/uploads/2020/01/202104-EGDF-response-on-the-EU-digital-levy.pdf
The broader EGDF approach on corporate taxation can be accessed here: http://www.egdf.eu/documentation/5-fair-digital-markets/4-digital-ready-taxation-framework/corporate-taxation/