Trust Bloomberg Tax for the international news and analysis to navigate the complex tax treaty networks and global business regulations.
By Joe Kirwin
California Gov. Jerry Brown said he doesn’t know how a digital turnover tax on internet companies, such as one the European Union is considering, would work.
In a Nov. 8-9 visit to the EU capital in Brussels, Brown also refused to criticize the tax policies of Silicon Valley companies such as Facebook Inc. and Alphabet Inc. subsidiary Google, despite numerous EU member states insisting they don’t pay their fair share of taxes.
That criticism increased in recent days after revelations in the Paradise Papers banking leaks that Apple has moved billions of dollars to the offshore financial center on the island of Jersey to avoid paying tax in the EU.
“These are my constituents,” Brown told Bloomberg Tax in an interview Nov. 9. “I am not in a position to say anything on this issue.”
Brown (D) also said the issue of Silicon Valley company tax policies had not been raised during visits to the European Commission and the European Parliament on Nov. 8 .
A day prior to his visit, European Competition Commissioner Margrethe Vestager announced she is re-opening the tax probe into Apple and accused U.S. tech companies, including Google and Facebook, of pursuing anti-competitive policies.
“I have been asking for an update on the arrangement made by Apple, the recent way they have been organized, in order to get the feeling of whether or not this is in accordance with our European rules, but that remains to be seen,” Vestager said at a Nov. 7 Web Summit in Lisbon. She added that the request was “just to get information” and that “it remains to be seen if we will open more cases after the Paradise Papers.”
The European Commission ruled in 2015 that the Irish government had to collect $13.5 billion in back taxes from Apple because Vestager said a tax ruling Ireland had with the Silicon Valley company violates EU state aid rules. The Irish government is challenging the European Commission decision in the European Court of Justice.
Asked by the European Commission why it didn’t raise the issue of digital taxation on internet companies with Brown during his Nov. 8 visit, Ricardo Cardoso, the spokesman for Vestager, told Bloomberg Tax that the California governor’s visit was strictly about the issue of climate change and “not tax issues.”
EU finance ministers are currently considering various digital taxation options. Countries led by France are insisting the EU adopt a temporary “turnover” tax on the internet companies to ensure that taxes are paid where profits are earned. French Finance Minister Bruno Le Maire insisted as recently as Nov. 7, when EU finance ministers met for a meeting of the Council of Economic and Financial Affairs, that it was essential the EU adopt in 2018 a digital tax on the “internet giants.”
According to confidential documents seen by Bloomberg, EU member states are considering conclusions to be finalized in December that will back the use of a temporary turnover or “equalization” tax.
“A temporary measure chosen upon further examination could be considered provided that it is applicable only until the preferred policy response has been implemented and does not have negative impacts on EU businesses and customers,” the document said.
It added that the temporary measure “could be an equalization levy as outlined in the OECD BEPS Action Report (2015) that is based on the turnover and remains outside the double tax conventions concluded by member states.”
To contact the reporter on this story: Joe Kirwin in Brussels at email@example.com
To contact the editor responsible for this story: Penny Sukhraj in London at firstname.lastname@example.org
Copyright © 2017 The Bureau of National Affairs, Inc. All Rights Reserved.
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to email@example.com.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to firstname.lastname@example.org.
Put me on standing order
Notify me when new releases are available (no standing order will be created)