The EU Council of Ministers of Finance and Economy held a meeting in Estonia, during which they discussed ways to solve the tax issues related to the onset of the digital economy.
Today, companies have to work in unequal conditions. As a result, the states lose income taxes, which make them resort to measures unpopular for business. For example, an increase in tax rates. This, of course, harms the economies of individual countries and the EU as a whole.
That is why it is necessary to agree the new international tax rules that take into account the peculiarities of the business model of the digital economy. This would ensure the same conditions for taxation of all companies, regardless of their location and business area.
It should be recalled that the finance ministers of France, Germany, Italy and Spain have already appealed to the EU leadership to introduce an “equal tax” for all digital companies, which would be paid together with taxes and fees currently in force.
The absence of new international tax rules and the diversity of tax regimes in European countries lead companies to withdraw part of their business beyond Europe, because under such conditions, the tax burden becomes smaller.
During the meeting, the EU Council of Ministers of Finance and Economy concluded that working on the new international tax rules, it is necessary to move away from the requirement that companies should be in a particular state or have assets in it. Instead, it’s time to operate the concept of “permanent virtual residence” of the country.