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Vestager Urges OECD To Hurry Up On Digital Taxation

by Ulrika Lomas, Tax-News.com, Brussels

24 November 2017


EU Competition Commissioner Margrethe Vestager has said that if the OECD has not drawn up new rules for the taxation of the digital economy by the spring, the EU will publish its own proposals.

In a speech in Paris, Vestager said that it has "become clear that our tax systems aren't well designed for modern ways of doing business."

She explained: "Tax systems that are based on a company's physical assets can't easily deal with digital companies. And in fact, domestic digital businesses pay less than half the effective tax rate of their offline equivalents."

According to Vestager, reform of both national and international tax rules is necessary if they hope to "fix" the issue. She stressed that "we have a responsibility to work together to find the right answer."

In October, the Commission launched a consultation on possible policy solutions to the problems associated with taxing the digital economy. The Commission's goals include fairer and more effective taxation, supporting public revenue, and ensuring a level playing field across businesses.

Vestager said that the results of the consultation will help the Commission to work with its partners in the OECD, "to find solutions that will work all over the world."

However, she did emphasize that "if there's no international answer to this issue by spring next year, we'll produce our own proposal for new EU rules to make sure digital companies are taxed fairly."

TAGS: tax | business | value added tax (VAT) | internet | multinationals | transfer pricing | tax reform | BEPS

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