Jakarta, CNBC Indonesia – Technology companies are under the spotlight of many countries. This is because many have enjoyed great benefits from changes in consumer behavior during the corona virus pandemic (covid-19), where many people quarantine at home.
Paolo Gentiloni, EU Commissioner for economics and taxation, said these companies have to pay more taxes, because they are the ones who are making the most profits right now.
Gentiloni’s comments come amid the ongoing rift between the United States (US) and the European Union (EU) over the taxes of companies like Apple, Alphabet and Amazon.
“This is a big problem,” Gentiloni told CNBC International at the European House Ambrosetti Forum, acknowledging the difficulty in overcoming differences with the United States.
However, the former Italian prime minister added that it is no longer possible to “accept the idea that the tech giants are not paying a fair amount of taxes in Europe.”
In 2018, the European Commission, the executive body of the EU, proposed a digital levy of 3%, arguing that the tax system needs to be updated for the digital age. However, the US White House says digital taxes are unfair because they disproportionately impact American companies.
Back then, the European Commission said digital companies paid an average effective tax rate of 9.5%, compared to 23.2% for traditional businesses.
However, after the coronavirus pandemic, technology companies have benefited from many consumers relying on their products for teleworking, shopping, and staying connected with other people.
“The digital platform giants are the real winners of this crisis, from an economic point of view,” added Gentiloni. “We all experience this in our own lives.”
Meanwhile, the government is in dire need of additional funding, and imposing new taxes is one of the main ways to achieve this. In this context, the EU wants to propose a new digital tax by 2021 if negotiations at the OECD level can take place at the end of the year.
“If we don’t get a decent result at the global level, the European Commission will come out next year with our own proposal,” Gentiloni said.
Earlier, the US withdrew from negotiation talks in June, raising doubts about tax progress that might be made this year.
Gentiloni said there had been progress at a technical level, but that the upcoming US presidential election would have significantly affected the process.
“We are in an election year in the US and I think this is having an effect too,” he said, adding that the EU still needs to “push for a global solution” from the US.
(hps / hps)