The Czech Government has become the latest to challenge the ‘creative’ tax strategies of Big Tech with the proposed introduction of a 7% digital sales tax in the country.
With the UK and France setting the standard earlier this year, several other European nations are starting to make similar noises to ensure Big Tech do not continue to dodge the tax man. In the absence of a bloc-wide approach to taxing digital bounties, the Czech Government is seeking to introduce a 7% digital sales tax, according to Reuters. The tax will be applicable from June, if it passes the final legislative hurdles.
Alongside the Huawei debate, Europe is heading towards a political collision with the US. Many would see these digital sales tax as a fair and reasonable position, forcing Big Tech to contribute back to the societies which have fuelled growth, but this is not the position of the White House. President Trump considers the tax as an attempt to raid the US economy for profit.
The proposed tax would be applicable to companies which generate global revenues exceeding €750 million, as well as turning over more than 100 million crowns ($4.32 million) in the Czech market. The companies would also have to have more than 200,000 Czech users to be subject to the tax.
The final proposals are yet to be approved, though if introduced on the planned deadline it would generate 2.1 billion crowns ($86 million) in tax during 2020, and approximately 5 billion crowns ($216 million) in the years following.
While it is not a perfect situation, individual European states are moving forward with digital sales tax proposals. Ideally, there would be a bloc-wide approach, though thanks to the power of veto this is unlikely ever to happen. The likes of Ireland and Luxembourg are offering the tax havens to Big Tech, securing very attractive deals at the expense of European ‘partners’.
It is encouraging to see Governments taking a firm position against Big Tech. For too long, these companies have made use of expensive lawyers to slip between the cracks of regulation, taking advantage of the plight of regulators and the speed of technological progress. Big Tech has abused the grey areas to insult the very societies which fuel profits.
Fair and reasonable tax is a fair and reasonable position to create, and it seems European Governments are finally fixing a broken mechanism.