The finance ministers of France, Germany, Italy and Spain have begun to demand that the European Commission insists that there is fair play from the likes of Amazon and Google when it comes to paying corporation tax in the countries in which revenues are generated.
In a letter which was signed by Bruno Le Maire (France), Wolfgang Schaeuble (Germany, Pier-Carlo Padoan (Italy)and Luis de Guindos (Spain) and addressed to the EU’s Estonian presidency, the ministers urged the Commission to create an “equalisation tax” on turnover that would bring taxation to the respective level of corporation tax in the country where the revenue was earned.
In addition to this, there is mounting condemnation for the various “deals” that have been made by various EU countries to attract multinational businesses. Not least the arrangements extended by Luxembourg and Ireland), the latter luring Google (Alphabet Inc), with its promise of very low levels of corporation tax.
If this was not enough to cause rancour, there is now also now outrage that certain global marketplace sites are giving overseas merchants access to significant sales to consumers in Europe countries upon which no VAT is accounted for, or returned to the respective European countries. The merchants, trading without having to charge VAT as part of their total pricing to consumers, are gaining an immediate and unfair advantage over their counterparts based in Europe and registered in the VAT system. Those operating outside of the VAT system are able to easily undercut local competitors without impacting on their (already higher) margins and the marketplace sites are also, it seems, turning a blind eye to this, facilitating tax avoidance, whilst raking in their percentages of these untaxed sales.
It has taken the small number of finance ministers mentioned above a considerable time to finally demand that there is fair play. This will, they hope, pressure fellow EU member countries to come clean and reveal what arrangements they have each made, in their own interests, to lure the multinationals and what has been compromised in respect of underpaid tax.
There are literally billions of euros in uncollected corporation tax and value added tax at stake here, which could and should have formed part of the cost of doing business in Europe for these giant multinationals. Few would argue against these corporations being compelled to accept the same taxation treatment as per their local, compliant competitors. In essence, creating a truly level playing field for all merchants.
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