Mason, R and Parada, L (2019) The Tax Subsidy War: Digital Battlefront. Tax Notes International, 92 (1183).
Abstract
We argue that the high revenue triggers in proposed digital taxes — including the recent Franco-German proposal for a digital advertising tax — may violate state-aid law and prohibitions on nationality discrimination in the Treaty on the Functioning of the European Union.
We explain how both digital taxes adopted by particular member states and digital taxes as an EU directive may discriminate against the EU subsidiaries of US-headquartered tech companies.
Our arguments depend critically on two features of proposed digital taxes: (a) their high revenue triggers, which ensure that only very large, and therefore disproportionately foreign, companies pay digital taxes; and (b) their narrow scope, which ensures that only companies operating in specific disfavored sectors face taxation.
To the extent that any digital tax proposal (whether unilateral or EU) ends up sharing these features, it would face the same challenges. If those flaws were corrected, digital taxes would be less discriminatory, but also less politically palatable.
Metadata
Item Type: | Article |
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Authors/Creators: |
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Keywords: | digital services tax, DST, digital tax, EU law, digital PE, permanent establishment, tech tax, web tax, google tax |
Dates: |
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Institution: | The University of Leeds |
Academic Units: | The University of Leeds > Faculty of Education, Social Sciences and Law (Leeds) > School of Law (Leeds) |
Depositing User: | Symplectic Publications |
Date Deposited: | 16 Oct 2020 12:21 |
Last Modified: | 16 Oct 2020 12:21 |
Published Version: | https://ssrn.com/abstract=3279639 |
Status: | Published |
Publisher: | Tax Analysts |
Open Archives Initiative ID (OAI ID): | oai:eprints.whiterose.ac.uk:166520 |