Six European countries announced that they will abandon the Digital Services Tax (ISD), also known as the ‘Google tax’, justifying the decision by the loss of revenue. However, the second “El Economista” in the decision also weighed pressure from the United States, which is trying to implement a new international fiscal policy for digital services.
France, Spain, Italy, England, Austria and Turkey have expressed their intention to end the ‘Google tax’ and replace their tax policy for digital services for the new international project, led by the United States, in which it is already part of the Organization for Economic Cooperation and Development (OECD). Still, these countries will have to await approval of the organization’s new tax regulations before eliminating the ‘Google tax’.
The decision to end the tax comes after the failure of several countries, including Portugal, to allocate revenues with the tax, to which they join as constants of the US government in applying tariffs to countries that decide to keep the ISD. Taking the Spanish case as an example, Madrid estimated to fit 968 million euros with the ISD, but stayed at 92 million euros in the first six months of 2021.
The United States applauded the declaration of the six countries and guaranteed that it will remove as a tariff correction as soon as countries end ISD and adhere to the OECD tax plan.
In total, the countries that have implemented the ISD are: Austria, France, Hungary, Poland, Portugal, Spain, Turkey and the United Kingdom. Belgium, Czech Republic and Slovakia are still studying its implementation. In addition to these, Latvia, Norway and Slovenia have officially announced or revealed intentions to implement the tax.
“These taxes are generally considered interim measures until an agreement is reached at the OECD level, and now that agreement has been reached, it will be important to monitor how countries change or revoke their Google rates,” he said. Elke Asen, an analyst at the Center for Global Tax Policy at the Tax Foundation, and Daniel Bunn, vice president of global projects at the Tax Foundation, a Washington-based tax study group.
“In addition, the European Union (EU) intends to implement its own digital tax from 2023. At the same time, the United Nations (UN) provided specials for automated digital services revenues to the Model United Nations Tax Convention , which would be applied to the parties of the treaty that agree with its inclusion”, explain the experts consulted by “El Economista”.
The OECD is negotiating with more than 130 countries to adapt the international tax system to the new digital reality. The current proposal would require some of the world’s largest multinational companies to pay part of their revenue taxes where their consumers are present. It is the so-called “first pillar” of the tax transformation that the OECD is preparing.