In Brussels, the EU is also planning to announce two new legislative proposals on taxation of technology giants next week. The EU has started drafting the above new regulations since last year. These new regulations will positively impact the largest technology companies in the United States.
Trade tensions between Europe and the United States are heating up. The European Commission, the EU's executive body, has previously warned that if the United States President Donald Trump's import steel-aluminum tariff plan has not been exempted by the EU, the EU will take countermeasures against the United States. At the same time, the tax reform recently passed by the United States may impact European technology and pharmaceutical companies operating in the United States.Both Europe and the United States have accused the other party of implementing trade protectionism and the trade war has been triggered.
When talking about the European Union’s tax plan, the European Commission’s Economic Director Alexandre Moscovici stated: “Don’t think this is an aggressive move we made. This is not an anti-American measure. The truth is that some of these companies are American companies. This is not protectionism. The emphasis is on tax equity."
The EU wants to modernize the corporate tax rules, and the traditional rules are based on the tangible assets and the company's business areas. The committee hopes to include virtual business in taxable terms, such as search engines that use targeted advertising that it sells on data collected in countries that do not have fixed institutions.
According to the new regulations, the EU may impose taxes on the income of technology companies rather than profits. This legislation may be short-term, and there will be more substantial adjustments later to define long-term regulations for virtual business.
EU officials said that the short-term tax rate may be set in the 1%-5% range, or based on the location of the user to determine the coverage of the income range, but the details of the program are still to be finalized. In an interview, Moskvich stated that the new regulations will avoid double taxation while avoiding unnecessary burdens on smaller companies.