EU members agree on developing digital taxation

APD NEWS

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The finance and economic affairs ministers of the EU member countries Saturday agreed to develop new digital taxation rules to tax digital technology enterprises.

"For us, it is important to agree on new international tax rules that also take into account the business models of the digital economy. This would guarantee the equal taxation of all companies regardless of their location or place of activity. I hope that today's discussion helped us get a step closer to a suitable solution," Estonian Minister for Finance Toomas Toniste said after the EU finance ministers meeting held in Tallinn, Estonia.

The ministers agreed to move forward swiftly to reach a common understanding at the Council of Finance and Economic Ministers in December, said a press release.

The current international rules are seen by many as out of date, as the company to be taxed has to be physically present, which in fact allows many companies not to pay their taxes. The business models of the digital economy differ substantially from those for the traditional economy, and companies often operate virtually in several countries.

Europeans have become increasingly aggressive against US technology giants seen by officials as gaining too much power, with Amazon and Apple also under scrutiny.

Moreover, several national authorities in the EU have opened up tax fights with Google, Airbnb and other Internet giants.

A French court, citing EU law, ruled in July that Google was not liable for 1.12 billion euros (1.27 billion US dollars) in taxes claimed by the state. France appealed the decision.

The ministers agreed to improve the customs union's IT systems and the way the systems are developed, for a higher cost-efficiency and sustainability.

"More discussions on the expert level are needed to achieve an agreement on how to go further. There is strong support for a pilot project and it could prove that the centralized approach to the IT works for the customs union," added the Estonian minister.

According to the Union Customs Code, all data exchange between customs authorities and businesses must be electronic from the beginning of 2021.

(ASIA PACIFIC DAILY)