According to Paolo Gentiloni, European Commissioner for economics and taxation, Amazon, Apple, and Alphabet are “the real winners” of the COVID-19 crisis, and it was no longer possible “to accept the idea that those giants are not paying a fair amount of taxes in Europe”.
The COVID-19 crisis has seriously dented the markets and complicated the activity of many companies. Now, as they are still facing the consequences of the pandemic, economic questions arise. And giants like Amazon.com Inc (NASDAQ: AMZN), Apple Inc (NASDAQ: AAPL), and Alphabet Inc (NASDAQ: GOOGL) have already caught a stray fist.
Currently, the U.S. and Europe are at odds over-taxation of the tech giants. European Commissioners believe that Apple, Amazon, and Alphabet pay far less than they should, and the “major problem” is overcoming disagreements between the nations. According to Paolo Gentiloni, European Commissioner for economics and taxation, they are “the real winners” of the COVID-19 crisis, and it was no longer possible “to accept the idea that those giants are not paying a fair amount of taxes in Europe”.
Tech Giants’ Response to European Digital Tax
The European Union has been dissatisfied with the taxation of the US tech gians for many years. European regulators have been often criticizing the biggest companies for earning big bucks on European citizens while paying scanty taxes. A string of countries has introduced special levies on American tech companies, but they have found a solution.
In response to European new taxes, Apple, Alphabet and Amazon announced tariff changes for business customers from countries with tax on digital services. This concerns the UK, France, Turkey and Italy, as well as non-European countries. In particular, they will get rid of these taxes by passing them on to the prices charged to their customers. For example, Apple has already updated prices in App Store for developers. In France and Italy, developer customers of the App Store will show an increase of 3%. In the United Kingdom, it will be 2% and in Turkey — 7.5%. This percentage is to be added to the existing value added tax. Depending on the country, it varies between 18 and 22%.
Further, starting on November 1, Google (NASDAQ: GOOG) will also increase the fees for all ads purchased from Google Ads and YouTube in several countries. Amazon has applied the price increase for third-party sellers in the UK since September 1.
In response to the companies’ new policy, the EU is now looking for imposing new taxes on the U.S. giants. Now, the European Commission is in talks with the US government, and if the negotiations fall, the EU may propose a new digital tax in 2021.
“If we will not have decent results at the global level, the European Commission will come out next year with our own a proposal.”
According to Gentiloni, there had been progress at the technical level, but the upcoming U.S. presidential election impacted the process.
Daria is an economic student interested in the development of modern technologies. She is eager to know as much as possible about cryptos as she believes they can change our view on finance and the world in general.