Why EU is Going Ahead With Digital Taxation

Margrethe Vestager

The European Union believes in good governance and will stop at nothing than doing the right thing. According to European Commission’s Margrethe Vestager, the continent is not going to stop at going digital on its taxation needs, even if this means pushing back against both the U.S. and China.

Both the countries are against the European Union’s decision to move ahead with a new way of taxing large tech companies that get away without paying tax for providing digital services. 

In a recent discussion to go global of digital services, the U.S. Treasury Secretary Steven Mnuchin seemed to chosen to withdrawn on June 17 over formal talks with the select EU representatives. As the European Commission Executive Vice President Margrethe Vestager, from Denmark, she has spoken in favour of the move even if US and China does not agree with it.  

The companies in focus are ironically American companies like Apple, Amazon and Google that make up for the long list of anti-trust and tax cases against them. 

The EU has no intentions of letting tax invasion go unnoticed. President Donald Trump has tried his best to dissuade the move. That is one reason he has tried to backlash at Vestager previously labeling her as the “tax lady” over her decision to force Apple to pay over $14 billion in unpaid taxes to the government of Ireland.

But Vestager has stood her ground for the sake of ensuring ‘open strategic autonomy’ in Europe when it comes to the notorious functioning of large foreign tech companies. 

In the whole scheme of things, China seems to be the bigger spoiler. Beijing continues to take advantage of the EU open tender system, while it stops EU counterparts to apply for tenders in its own country. China wishes to use the EU market for its gains, but does not reciprocate by giving open access to EU subsidiaries. 

As a response to Chinese bad manners, the European Commission has gone ahead and shown complete support for the creation of a legal tool that would allow Brussels to crack down against foreign subsidies, including by blocking acquisitions or banning companies from participating in public tenders.

Vestager therefore believes that its high time EU settled the scores, whether it is the US or China. Speaking to the media, she substantiated that the new tax is necessary due to the ease with which many large tech companies minimize their European taxes. That makes it “so difficult to defend the many, many, many businesses all over the world who pay their taxes.” 

Being put incharge of anti-trust and Covid-19 bailout enforcer, this is going ot be major move made by her to ensure that economic rescue packages passed by governments within the bloc do not unduly distort markets. She also has plans to enforce strict rules on those who receive bailout money without proving due accountability. 

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