The European Union is out to counter tech companies’ tax maneuvers by directly targeting their revenue, and now we get some insight into how the EU will make it happen.
In an interview with Le Journal du Dimanche, French Finance Minister Bruno Le Maire said that the EU will unveil plans to tax tech companies’ revenue at a rate between “2 percent and 6 percent,” but most likely will inch closer to the 2 percent. Le Maire added that this is a “starting point,” and added that it’s better to get a policy in place than to deal with “interminable negotiations,” and can be further improved on later.
According to the minister, the official EU directive would be unveiled in the “coming week.”
Companies such as Apple, Amazon, Facebook, Google and other tech firms have been accused of using legal loopholes to avoid paying taxes in European countries. For example, they would route profits through Ireland or even British island of Jersey. Theoretically speaking, a tax on revenue would close that loophole by collecting money where it’s earned, rather than where the money is kept. That’s what these companies have been taking advantage of.
Tech companies will likely not go down without a fight either and say that their current financial arrangements and perfectly legal. Ireland has continued to object to EU tax claims, so this shouldn’t come as a surprise because the country is a safe haven for tech companies.