European countries call for new EU tax on tech giants

Europe’s battle to prevent multinationals from hiding their profits in tax havens has taken a new direction. A number of European countries are urging the EU to slap tech giants with a new tax. In an effort led by France, Germany, Italy and Spain, the European finance ministers want multinationals such as Amazon and Google to be taxed in Europe based on their revenues rather than just their profits as they are now.

Currently such companies are often taxed on profits booked by subsidiaries in low-tax countries like Ireland even though the revenue originated from other EU countries. “We should no longer accept that these companies do business in Europe while paying minimal amounts of tax to our treasuries,” the four ministers wrote in a letter seen by Reuters.

The letter, signed by French Finance Minister Bruno Le Maire, Wolfgang Schaeuble of Germany, Pier-Carlo Padoan of Italy and Luis de Guindos, urged the European Commission to come up with a ‘solution’ to equalise tax on turnover.

“The amounts raised would aim to reflect some of what these companies should be paying in terms of corporate tax,” the ministers said in the letter.

France has stepped up pressure for EU tax rules after facing legal setbacks trying to obtain payments for taxes on activities in the country. A French court ruled in July French court ruled that Google’s Alphabet was not liable to pay 1.1 billion euros ($1.3 billion) in back taxes because it had no ‘permanent establishment’ in France and ran its operations there from Ireland.

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