EU to Proceed with Own-Resource Digital Levy Regardless of US Digital Tax Proposals

Speaking during a European Parliamentary debate on 28 April, EU Commissioner for Economy, Paolo Gentiloni, confirmed that the Commission will proceed to publish its proposal for a digital levy by the end of June, irrespective of developments at OECD level and the US digital tax proposals, noting that the EU digital levy was necessary for the creation of a EU generated ‘own resource’, for funding the NextGenerationEU instrument and recovery and resilience fund. In May, the Commission will also publish its Communication on Business Taxation for the 21st Century.
Elsewhere, speaking at a virtual conference, Nobel Prize winning economist Joseph Stiglitz discussed comments made by Ireland’s Finance Minister, Pascal Donohoe, that Ireland needs to be able to use tax policy to compensate for advantage of scale, resources and location enjoyed by larger countries, saying “Much of the tax revenue that Ireland gets is a result of stealing tax revenue from its neighbours – from other members of the EU…I think, at one time or another, the EU would have had to address this issue anyway”. Under the US proposals for digital tax, countries like Ireland are presumed to lose significant revenue. Under the Stability Programme Update for 2021 of the Irish Department of Finance published on 14 April, Ireland stands to lose 2 billion Euros in corporate tax revenue by 2025. 
OECD Tax Director, Pascal Saint-Amans, has recently confirmed that the G20 meeting of the finance ministers in July is still the tentative deadline for an agreement to be reached, however some details may need to be agreed until October, the date of the subsequent G20 meeting.  
Ref.: CFE’s Tax Top 5 – 3 May 2021

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