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EU Postpones Digital Tax

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The EU has postponed a new digital tax, much to the relief of tech companies.

Margrethe Vetager, EVP of the European Commission for a Europe Fit for the Digital Age and commissioner for competition since 2014, tweeted Monday (July 12) that the new digital tax would be postponed until October, though tech companies are hoping to nix the unilateral digital levy altogether.

Also Read: ITI Pans UK Digital Services Tax

The tax had been planned to take effect later this month. The October date is due to a G20 finance minister plan for global tax reform expected to be adopted then, according to the Computer & Communications Industry Association. 

The digital tax was part of a larger plan to fund recovery from the COVID-19 pandemic and with the justification that tax rates for digital companies are lower than for those in traditional businesses.

Also Read: Tech Giants Offer Road Map to EU's Digital Future

“It is positive that the European Commission is prioritizing global tax reform over a unilateral digital levy which risks derailing international efforts," said CCIA VP Christian Borrgreen, head of the Brussels office. “We urge all nations to immediately remove unilateral digital taxes as foreseen in the global framework. A new global tax framework for the 21st Century is crucial to ensure legal certainty, for economic recovery and to avoid international tax and trade tensions.”  

“ITI welcomes the European Commission’s decision to postpone consideration of a digital levy and fully commit its efforts to realizing a multilateral, consensus-based approach to the tax challenges arising from the digitalisation of the global economy," said Megan Funkhouser, director of tax policy for the Information Technology Industry Council (ITI). "Such action is in keeping with the multilateral project’s stated intent for participating governments to withdraw unilateral tax measures, and in that spirit, we encourage the Commission to further commit to taking the levy off the table entirely.”