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The American Chamber of Commerce to the EU (AmCham EU) has raised concerns over proposals to introduce new tax mechanisms for the digital economy.
On September 21 the European Commission's Directorate General for Taxation and Customs Union adopted a Communication on 'A Fair and Efficient Tax System in the European Union for the Digital Single Market,' with a legislative proposal expected to be tabled by Spring 2018.
In releasing the report, Pierre Moscovici, EU Commissioner for Economic and Financial Affairs, Taxation, and Customs, said: "Digital firms make vast profits from their millions of users, even if they do not have a physical presence in the EU. We now want to create a level playing field so that all companies active in the EU can compete fairly, irrespective of whether they are operating via the cloud or from brick and mortar premises."
Options could include a tax on turnover rather the profit, an online advertising levy, or a withholding tax on payments to digital businesses.
AmCham EU warned that a turnover (or "equalization") tax could "substantially reduce the amount of company profits available for investment and reinvestment," with a negative effect on economic growth. In a statement released on September 26 it warned that: "Adopting an equalization levy (or other arbitrary turnover-based tax) would hurt the attractiveness of the EU."
The group also suggested that including digital taxation under the scope of the Common Consolidated Corporate Tax Base (CCCTB) could also have a negative impact on EU competitiveness and growth if not executed in line with internationally agreed rules on value creation.
"Unilateral action by the EU would seriously undermine international efforts to address tax issues," said Susan Danger, CEO of AmCham EU. "The EU should continue to support tax reforms and the harmonization of tax regimes within the OECD framework. Current EU plans risk putting Europe at a competitive disadvantage vis-à-vis other global players."
On September 21 the European Commission's Directorate General for Taxation and Customs Union adopted a Communication on 'A Fair and Efficient Tax System in the European Union for the Digital Single Market,' with a legislative proposal expected to be tabled by Spring 2018.
In releasing the report, Pierre Moscovici, EU Commissioner for Economic and Financial Affairs, Taxation, and Customs, said: "Digital firms make vast profits from their millions of users, even if they do not have a physical presence in the EU. We now want to create a level playing field so that all companies active in the EU can compete fairly, irrespective of whether they are operating via the cloud or from brick and mortar premises."
Options could include a tax on turnover rather the profit, an online advertising levy, or a withholding tax on payments to digital businesses.
AmCham EU warned that a turnover (or "equalization") tax could "substantially reduce the amount of company profits available for investment and reinvestment," with a negative effect on economic growth. In a statement released on September 26 it warned that: "Adopting an equalization levy (or other arbitrary turnover-based tax) would hurt the attractiveness of the EU."
The group also suggested that including digital taxation under the scope of the Common Consolidated Corporate Tax Base (CCCTB) could also have a negative impact on EU competitiveness and growth if not executed in line with internationally agreed rules on value creation.
"Unilateral action by the EU would seriously undermine international efforts to address tax issues," said Susan Danger, CEO of AmCham EU. "The EU should continue to support tax reforms and the harmonization of tax regimes within the OECD framework. Current EU plans risk putting Europe at a competitive disadvantage vis-à-vis other global players."