Fair Taxation: Commission launches a public consultation on the digital levy

The European Commission has yesterday launched a public consultation on a new digital levy. This initiative aims to ensure fair taxation in the digital economy, while at the same time contributing to Europe’s recovery. Fair taxation and ensuring that Europe is fit for the Digital Age are top priorities for the European Commission, as stated by President von der Leyen in her Political Guidelines. Tax systems have been lagging behind global technological developments over the past number of years. This has resulted in digital companies paying much less tax than they should. The COVID-19 crisis has also exacerbated this situation as it has accelerated the transition towards a more digital world and boosted profits and revenues for many online companies. The digital levy would help to ensure that EU rules are fit for purpose in the digital economy, and that companies, whether digital or not, compete in Europe on fair terms, and in doing so contribute to the recovery. Commissioner for the Economy, Paolo Gentiloni, said: “Today’s public consultation marks an important step towards our ultimate goal of ensuring the fair taxation of the digital economy. Achieving this goal is even more important in the current context. COVID-19 has caused an unprecedented economic shock and as we work to build a sustainable recovery, it is vital that all companies make a sufficient contribution to this effort.” The launch of the consultation follows the mandate given by the European Council in July 2020  to come up with a proposal for a new own resource by June 2021. The levy will be designed in a way that is consistent with the ongoing work at the OECD, and in the G20, and will be compliant with WTO and other international obligations. The public consultation will run for 12 weeks. All interested parties are invited to share their views.