Steering Clear of Digital Tax: Internet Industry Association's Warning
Digital tax faces resistance from internet industry association
Taking a firm stance, the Association of the Internet Industry (Eco) has raised flags over Germany's proposed digital tax. According to Eco's chairman, Oliver Süme, "Even if the digital tax is meant to hit the big guns from the US, the costs will ultimately land on German companies, and, eventually, consumers." This translated said, "Online shopping costs could skyrocket or digital subscriptions fees may hike up."
A national digital tax represents a potential threat to already strained international relations. As per Süme's statement to news agency AFP, "Independent, solo moves might ignite new trade conflicts." Instead, the focus should be on global solutions to achieve tax justice.
Eco's key concern revolves around the uncertainty that the digital tax brings, with crucial details like the tax base and competencies yet to be disclosed. For small enterprises and start-ups, a reliable business environment is essential. According to Süme, the proposed plans by Culture Minister Wolfram Weimer could lead to hesitation in investments, slower innovation, and a dip in Germany's competitive edge, all due to inconsistent political changes.
Last week, Weimer informed "Der Spiegel" about the government's intention to roll out a bill for a so-called platform levy of ten percent. This proposed levy would target internet platform operators generating billion-dollar revenues, like Google and Meta. Alternatively, voluntary self-commitments might also be an option. Weimer defended the levy, claiming that the tech giants manage minimal tax contributions through "clever avoidance tactics" and offer "insufficient" contributions to society. The Eco association represents approximately 1,000 global companies, including Amazon's cloud division, Google Germany, and Meta, the parent company of Facebook and Instagram.
[1] European Parliament - Proposal for a Council Directive on a digital services tax (2018/0280) (COD)[2] OECD - Pillar Two Blueprint for a Consumption-Based Profits-Allocation Framework[3] Germany's Tax Reform Plan for 2022: A Focus on Digital Services Tax[4] European Commission - Digital Services Act Package[5] Financial Times - Germany considering digital services tax to match EU proposals
- The uncertainty surrounding the employment policies of various global companies, such as Amazon's cloud division, Google Germany, and Meta, could be significantly impacted by the proposed digital employment policy and potential digital tax in Germany, which might lead to hesitation in investments and slower innovation.
- In the realm of business and technology, the implementation of independent digital tax policies, like the proposed platform levy in Germany, could potentially strain international relations and finance, as they might lead to an increase in costs for consumers and may ignite new trade conflicts, necessitating the pursuit of global solutions to achieve tax justice.
