Digital companies : Berlin wants to be a global solution to digital tax

How to tax Facebook, Google & co.?Photo: imago/Kyodo News

The question of how to global Online giants (and smaller digital companies) better to the cashier to ask, is dividing the European Union. The EU digital tax is for the time being, from the table, the French government is forging ahead at the national level, and Germany is committed to a global agreement, without, however, the Federal Finance Minister, Olaf Scholz (SPD), the desired solution, in agreement with all of the major Nations would be in sight. But given the failure of the EU Commission's proposed digital tax in the Council of EU Finance Ministers (Ecofin) on this Tuesday, you see, in Berlin, the best way is to come at the international level, a success. "We seek a global minimum tax", it said on Monday from the Ministry, after it became clear that Sweden, Denmark, Finland and Ireland do not want to give up their resistance against the EU-taxation. In tax matters, the Minister of Finance round, the EU has applied the principle of Unanimity.

Scholz also relies on United States

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for Free order

National interim solutions are rejected in Berlin, also because you could jeopardize an agreement on the level of the G20. And this level is aiming to Scholz, the minimum level of taxation to impose. But, to get the U.S. government into the boat. In June, when G20 Finance Ministers meeting in Osaka, the topic on the Agenda is to, in order to clarify fundamental questions. Under the German EU presidency, starting in July 2020, the concern should be brought to the Union. But it is not in Berlin, so on to France. The global minimum should not be to enforce the tax, then wool, together with Paris from the 1. January 2021 to binding rules within the EU. How the might look like, is still unclear. The EU Commission had proposed that large digital companies with a global turnover of at least 750 million euros in the year and a minimum turnover of 50 million Euro in Europe pay three per cent on their profits. That failed in December on the resistance of several countries. France now wants to introduce a stripped-down variant, which, in particular, Online advertising revenue will be taxed.

the Problem of Profit shifting

In Berlin, continues the attempt at a global solution to the ongoing efforts within the organization for development and economic cooperation and development (OECD) to develop international tax rules in order to limit the Digital-giant-used ways of Profit shifting, or to prevent entirely. The minimum tax, to enforce Scholz global, is one of them. On the other hand, it is also a question that Google, Amazon & co. also pay taxes where they make huge sales, but because of the lack of corporate offices or sales organizations, as they are the rule in classical industrial companies and service providers, little or no taxes. It is, ultimately, to take more of the consumer side and less to the corporate offices (in low-tax countries), or production and distribution sites.

Different approaches

there are various possibilities, which are currently being discussed within the OECD. Would be possible a part of the profits of the global, but only in a few States invested large enterprises all other States, according to their number of users, in particular, in the case of social networks or Online marketplaces such as Amazon would be effective. A second approach is that of the United States the preferred solution, when the profits be divided according to the market principle: in addition to customer sales, here are some more factors such as brands, or data would be used. Thirdly, it would be out of the question to make a "significant economic presence" to the tax base, for which then a website in the language of the country office promotional activities.

disadvantages for Germany?

but the Federal government has a Problem. Because such Considerations could quickly grab on the circle of Digital and Tech companies. So far, however, it is so that the taxation by residence countries and production sites to meet the export Nations such as Germany. A greater shift of taxation towards consumption could lead to tax losses in Germany. The USA might not like that very well, because they could offset the tax losses in the case of a stronger global distribution of the profits of U.S. technology companies – after all, the Americans are large consumers of global goods, such as car bodies from German production. A global digital tax on profits, all of which interests, involves, somehow, and at the end, at least, not less money jingling in the German state coffers – that is the goal that the Scholz until the middle of next year.