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UK's Digital Services Tax Fair to Tech Giants, Asserts Augusto Beato

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Augusto Beato, CEO of Portland SEO, said a proposed digital services tax that would apply to “established tech giants” rather than start-up companies like the one being pushed by the United Kingdom is timely and fair.

"The European Union should follow the United Kingdom's lead in targetting the likes of Google, Facebook, and Amazon.com to avoid a disproportionate impact on their local companies," said Beato.

He was reacting to separate news that both the European Union and the United Kingdom have proposed to levy the digital services tax.

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The EU plans to enforce a proposed 3 percent levy later on companies with worldwide revenues of over $848.4 million and $56.7 million in Europe. It would also enact an interim tax covering digital activities.

On the other hand, The head of Britain’s treasury Philip Hammond has proposed a new tax targeting tech giants such as Google, Facebook, and Amazon.com. It would take shape as a narrow tax on revenue generated in Britain for tech-platform business models.

Pierre Moscovi, the Commissioner for Economic and Financial Affairs, along with Valdis Dombrovskis, argued that the new EU measures would ensure that all companies pay a fair tax. French President Emmanuel Macron spearheaded the initiative in the European Union.

Major European tech companies, including Spotify, Booking.com, and Rovio, have pushed back against the proposed EU initiatives. In a letter sent to the EU’s 28 finance ministers, tech CEOs urged plans to withdraw the 3 percent digital services tax. They argued that it would cause “material harm” to the European tech sector.

According to European tech companies, the proposed digital services tax would cause “material harm” to the European tech sector as it has been designed with large and highly profitable companies in mind. Consequently, it will have a disproportionate impact on European companies, resulting in unfair treatment.

Since most tech start-ups and new companies rely on digital revenue to grow and scale, the European tech companies added that the digital services tax "would deprive these very businesses of an essential source of capital to reinvest in their growth, weakening their ability to compete globally.”

Other EU member states have criticized the initiative. Splitting with the French President, Ireland, Finland, and the Czech Republic are among the countries who have stated the tax would harm bilateral tax agreements with non-EU countries. The disagreements may ultimately scrap the proposed levy as it requires the approval of all 28 member states.

To garner support, an EU spokesperson confirmed a surprising concession. Companies could deduct the DST from their corporate tax base.

Meanwhile, The head of Britain’s treasury Philip Hammond has proposed a new tax targeting tech giants such as Google, Facebook, and Amazon.com. He described as a necessary evolution of the corporate tax system in the digital age.

“The rules have simply not kept pace with changing business models,” said Hammond. “And it is clearly not sustainable or fair that digital platform businesses can generate substantial value in the U.K. without paying tax here in respect of that business.”

Hammond said his proposed “digital services tax” would apply to “established tech giants” rather than start-up companies and would take shape as a narrow tax on revenue generated in Britain for tech-platform business models.

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