BRUSSELS (Reuters) – Finance ministers of the European Union’s three Nordic countries have urged their partners to shelve a plan to tax large corporations for their digital turnover, saying it could damage the European economy.
The call could further weaken the plan proposed by the European Commission in March. It has already attracted criticism from smaller EU states and a lukewarm response from Germany’s new government.
“A digital services tax deviates from fundamental principles of income taxation by applying the tax on gross income, i.e. without regard to whether the taxpayer is making a profit or not,” Swedish Finance Minister Magdalena Andersson, and her counterparts from Denmark and Finland, Kristian Jensen and Petteri Orpo, said in a joint statement on Friday.
The commission’s proposed tax comes amid criticism of large digital companies, like Facebook <FB.O> and Google <GOOGL.O>, who are accused by some EU states of paying too little tax in Europe, exploiting an outdated system that has allowed them to shift profits to low-tax countries like Luxembourg or Ireland.
Yet the Nordic countries, which are home to several large digital companies like Sweden-based music streaming service Spotify <SPOT.N>, said the proposed levy would go against EU interests because it would complicate international cooperation in the tax area and could trigger retaliation from EU’s partners.
They urged reform of the digital tax system but said this should be done at global level by the Organisation for Economic Co-operation and Development (OECD), which traditionally leads international talks on tax overhauls.
The call for global action echoes requests from other EU states. The commission has however argued that international changes on tax matters have historically been very slow to come into effect and has proposed the tax as a temporary measure before global reforms.
(Reporting by Francesco Guarascio; Editing by David Holmes)