EU finances ministers will discuss a new EU-wide digital tax, that aims to be agreed upon by the end of the year.
The EU would impose a 3% tax on turnover of digital firms like Google and Facebook who are accused of moving around their profits so they pay inadequate amounts of tax.
A third of EU states, including France, Italy and Spain, supported the new plan in a meeting on Wednesday but the smaller low tax nations, like Ireland and Luxembourg, oppose the measure on the basis it could cut their tax revenues.
All members states must back the plan for the tax to be introduced.
The larger countries are pushing for an EU wide deal as member states are beginning to announce their own digital tax policies which risks fragmenting the single market.
The UK announced its own plan for a digital service tax on Monday in the Chancellor’s budget. The UK will tax digital companies revenue’s at 2% as long as the companies are profitable and have revenue sales exceeding £500 million. This will come into force in 2 years time, therefore it remains unclear if the UK will still be in the EEA under the Brexit transition process.
However, there are concerns if the UK has the ability to enforce such a tax without leaving loopholes, something the EU is more likely to be able to achieve.
The proposed tax shows the Bloc’s willingness to tame the power of the new digital corporations but many believe more is needed to curtail the power of these media giants.
To overcome the opposition the new proposal has an expiry date.
The global debate on the overhaul of digital taxation has produced no results as competing ideologies alongside nationalist interests have meant there is very little consensus.