EU plan to tax big tech stumbles due to three countries

Image via Christian Wiediger

The European Union’s plan to set a 3% sales tax on big tech has stumbled today after Denmark, Ireland, and Sweden all said that they couldn’t support the tax in its current form. Other countries including Italy have decided to address the issue on a national level. The U.K.’s Chancellor already set out plans in the budget last week to have a 2% digital services tax which would come into effect in April 2020.

The EU’s efforts are being spearheaded by the French finance minister, Bruno Le Maire. According to Bloomberg, the minister has offered a concession to opponents of the proposal saying that France would support pushing back the introduction of the tax all the way to 2021.

Jokingly referring to the Irish finance minister, Paschal Donohoe, Le Maire, during the discussion on the proposal, said:

“The debate shows that we’re moving in the right direction. It just remains for me to offer Paschal a beer in a Dublin pub, and then I think we’ll be able to move toward a decision.”

The Danish finance minister, Kristian Jensen, cited retaliation from the United States as one of the reasons his country could not back the proposal. Speaking to reporters on the sidelines of the meeting, he said:

“It is very difficult to see an agreement on the digital tax because so many technical issues are not solved yet. Of course there will be a reaction from the U.S., [it’s] not a good idea for Europe.”

Jensen may have a point about U.S. retaliation to these types of these measures. After the U.K. announced its tax last week, Representative Kevin Brady, a Republican from Texas, called the measures troubling and would prompt a review of the U.S. tax and regulatory approach to “ensure a level playing field in global markets.”

Source: Bloomberg, Reuters

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