Digital Services Tax
Continued from Flux Trends’ 6 Trends for 2019…
The worlds of business, technology and politics collide as governments threaten a digital services tax (DST) for the world’s tech giants. Many of these companies use loopholes in international tax systems so they are taxed in jurisdictions with low tax rates. As an interim measure before it embarks on sweeping reforms, the European Commission plans to tax tech companies with total annual worldwide revenues of €750 million or EU revenues of €50 million. The 3% levy will be collected where that revenue is generated, rather than where the companies are domiciled for tax purposes.
But not all EU members agree. While countries like Ireland, Sweden and Denmark are opposed to the proposal, arguing that a DST would exacerbate trans-Atlantic trade tensions as many of the tech giants are American, other members argue that the levy should be increased to 5%.
The UK and Spain are already forging ahead with their own frameworks. The UK plans to introduce a temporary service tax from April 2020, post Brexit, while Spain plans to implement a 5% levy on foreign and Spanish companies’ digital services, making it the first country to implement a legislated digital services tax.
Above: All about digital services tax
By: Dion Chang and Khumo Theko
About Dion Chang
About Khumo Theko
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Image credit: Rawpixel
Video credit: EU Tax and Customs
