BRUSSELS: Spotify, Booking.com and other European hi-tech firms on Tuesday urged EU member countries to drop a proposed digital tax, warning it would harm economic growth and innovation in Europe.
France for a year has rallied European Union partners to draw up the tax which Paris says is necessary to ensure that global tech platforms such as Facebook and Google pay their fair share.
Britain’s government said Monday it will introduce a new digital services tax aimed at tech giants from 2020, after it exits the EU.
“We write to you as leading European businesses to express our serious concern about the proposed Digital Services Tax (‘DST’),” the CEOs and other top executives of 16 European firms said in a letter EU finance ministers.
These businesses “urge you not to adopt a measure which would cause material harm to economic growth and to innovation, investment and employment across Europe,” they added.
Paris argues that the measure would be a popular accomplishment for the EU ahead of European elections next year, in which anti-Brussels populists could do well.
However, Ireland leads a small group of countries that argue the tax would also punish European companies and stifle innovation.
Dublin, along with Luxembourg and the Netherlands, are the European homes for several US tech giants that would face the tax.
The European businesses said the impact of the proposed tax has not been studied well enough.
“Most start-ups and new companies rely on their revenues to grow and scale,” the business leaders said.
– ‘Pay fair share’ –
“The proposed DST would deprive these very businesses of an essential source of capital to reinvest in their growth, weakening their ability to compete globally,” the letter said.
“Taxing revenues, as opposed to profits, will also impose a significant compliance cost, requiring new processes and infrastructure to be established.
“European technology companies, and particularly companies which are not yet profitable, would be the hardest hit,” it said.
The proposed tax also raises a number of legal, technical and political concerns, including that of double taxation, it said.
Under pressure from France, EU finance ministers are due to discuss the proposed tax at their next meeting in Brussels on November 6.
The European Commission, the EU’s executive arm, on Tuesday defended the proposal.
Commission spokesman Johannes Bahrke recalled what Economics Commissioner Pierre Moscovici had previously told US firms that the proposed tax is “nationality and company neutral.”
Bahrke added: “Our goal is to ensure a level playing field for all businesses, whether they are EU based, non-EU based, small or big.”
He also recalled the Commission’s goal and “preferred option” is to find a solution through the Organisation for Economic Cooperation and Development, which groups the world’s top economies.
Commission spokeswoman Mina Andreeva added: “Digital companies should pay their fare share of tax.”
Andreeva added that Britain’s plans for a similar tax “makes our point for action at the European level” where businesses pay a common tax rather than many separate ones.
Signatories to the letter included top executives of eDreams ODIGEO, Spotify, Allegro.pl, Booking.com, Supercell, eMag, Marktplaats, TakeAway.com, Code for All, GetYourGuide, Rovio, Ceneo.pl, Fortum, Learnworlds, Zalando and Dreamstime. —AFP