EU mulls digital firms’ global profits tax

The European Union is asking its citizens to help decide on a fairer tax regime for large digital corporations that may include a tax on their global profits.

Firms such as Amazon, Google and Facebook have often been accused of paying too little tax within the bloc by establishing their regional headquarters in low-tax countries such as Luxembourg and Ireland.

The executive European Commission wants binding legislative proposals for a fair taxation of the digital economy by March.

In a public consultation published on Thursday, it listed new ideas on what such a blueprint might contain.

It is seeking responses on a “unitary tax” that would be levied on a share of digital companies’ global profits, divided up between the EU countries where they operate.

This option has never appeared in EU documents before.

It would be a long-term solution, as would a proposed tax using the corporate rate of the countries where the firms’ consumers are, rather than where the firms are based.

That would eliminate the incentive for multinationals to set their EU headquarters in low-tax states.

The commission also sought reactions to the idea of changing the principle of corporate establishment, so that companies could be taxed when they have a “digital” presence in a country. That was an option listed in a document published in September .

In the short term, EU states could impose a tax on revenues from “digital activities” or services, like the sale of online ads.

They could also consider a withholding tax on digital payments or a “digital transaction tax” levied on companies selling consumers’ personal data.

The move is set to gauge public support for an initiative that is backed by the EU’s big states but opposed by smaller, low-tax countries who fear losing revenues.