Arnon Dror | Europe’s Plan to Tax Tech Companies
Big tech companies like Facebook, Amazon, and Google should brace themselves for possibly new taxes in Europe, says finance executive Arnon Dror. This comes on the back of news that French President Emmanuel Macron has supported the European Commission’s plan to slap a 3% tax on their sales or revenues instead of their profits. Image Source: NewSonia
While France has made clear its position, the rest of Europe remains divided on the proposal. Last Monday, three other European countries (Denmark, Ireland, and Sweden) rejected the proposal and announced they would proceed with their own plans.
Based on the current proposal, tech companies with annual global revenues of at least $851 million and online sales of $56.8 million in the European Union will be charged with the new 3% tax on revenues. It goes without saying that tech companies like Facebook, Amazon, Google, and Apple will be the first companies hit, says Arnon Dror.
Last year, social media giant Facebook’s revenue hit $40.7 billion with a net income of $15.9 billion. E-Commerce behemoth Amazon on its part reported net revenues reaching almost $178 billion, up by more than 30% the previous year. Meanwhile, the parent of multinational tech company Google Alphabet reported that their annual revenue last year surpassed $100 billion. Finally, innovative leader Apple announced that revenues are at their highest this year, reaching $265.6 billion of which 82% was generated by sales from the iPhone.
Those in favor of the levy hope that it will take effect in 2020, but some countries can’t wait that long. The United Kingdom which voted to leave the European Union next year in March has their own digital tax in the works. Instead of 3%, they’re charging a 2% tax on sales of digital services in their country, says Arnon Dror. Does one percent make a difference? The finance executive believes so.
As tech companies continue to rake in billions while paying little of their fair share in taxes because of the low rates in some countries in the region, European countries should be able to generate hundreds of millions in additional revenue easily if the proposed tax plan pushes through. Social services and wages are seen to benefit or increase the most once governments spend the additional revenue, explains Arnon Dror. Earlier this year, Bloomberg ran a report that Google was able to save as much as $3.7 billion in taxes, after taking advantage of tax loopholes in Ireland, Netherlands, and Bermuda.
Tech companies, however, are not taking the proposed tax plan sitting down. They are joined by European tech companies like Spotify and Booking.com. The popular music streaming service reported revenues of 2.93 billion euros or 3.34 billion USD last year, while travel fare aggregate website Booking.com had revenues amounting to $12.68 billion last year.
Nonetheless, tech companies are willing to cooperate and work on a solution that will be beneficial to all.
Arnon Dror would like to hear your thoughts on Europe’s proposed tax plan for big tech companies. Leave him a comment below.