Senate Finance Committee Criticizes EU Countries' Unilateral Digital Tax Moves

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Posted by Andreas Hellmann on Thursday, January 31st, 2019, 11:59 AM PERMALINK

Senate Finance Committee Chairman Chuck Grassley (R-Iowa) and ranking member Ron Wyden (D-Ore.) have again criticized European plans to tax American tech companies. In a letter addressed to Treasury Secretary Steven Mnuchin, the Senators criticize individual European Union countries that have already imposed a digital services tax or will do so soon after failing to agree to an EU levy.

The European Commission was not able to make a case for their tax proposal since multiple low tax member states like Ireland, Luxembourg, and the Nordic countries strongly oppose those plans. The letter comes at a time where more and more countries like France, Spain, Austria already have or soon will impose their own local Digital Services Taxes.   

“We write to express our serious concern regarding unilateral action by foreign countries to establish digital services taxes designed to discriminate against U.S.-based multinational companies. It is important that you make clear to the representatives of these countries the need to abandon unilateral actions and work through the multilateral process at the Organization for Economic Cooperation and Development."

An EU-wide or even unilateral Digital Services Tax poses unprecedented dangers to tax competition, tech-innovation, European and worldwide economic growth. The new tax would represent a dramatic and irreversible shift for the international tax system.  It would mean damage to the transatlantic relationship and could lead to a spiral of retaliation.

The EU intentionally designed this tax in a way to almost exclusively target American companies as there is no comparable digital industry anywhere in the European Union. 

Read the full letter here.

Photo Credit: Bankenverband - Bundesverband deutscher Banken

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