Spain will introduce a digital services tax at the end of the year that would hit the revenue of companies such as Facebook Inc and Alphabet Inc’s Google in a move likely to draw the ire of the US administration.
The levy, which could raise as much as €850mn ($919mn) a year, won’t be implemented until December to allow the Organisation for Economic Co-operation and Development to make a final push to reach an agreement on a separate, global tech tax.
Countries including France and the UK have moved forward with their own versions of the digital tax, concerned current laws don’t properly account for a worldwide, data-driven economy. The European Union has also said it would consider a bloc-wide tax in the absence of a global solution. American officials have threatened to impose tariffs on any country that institutes a levy on tech revenue.
The US initially threatened tariffs as high as 100% on $2.4bn of French goods in response to the tax, before Paris said it would delay collecting the revenue until December.
French and Spanish officials both say a digital tax levied by multiple countries would be more effective than piecemeal policies, and Spain’s support may inject additional momentum into the OECD efforts.
Those talks are trying to address frustration among voters around the world about what’s seen as large-scale tax avoidance. Corps are often domiciled in other countries — including low-tax jurisdictions such as Ireland or Bermuda, and shift money seamlessly across borders to minimise their obligations. Companies that sell online can easily avoid paying taxes in countries where they nevertheless make significant sales.
Facebook’s chief executive officer Mark Zuckerberg said at the Munich Security Conference that he would support OECD efforts to find a global compromise on a digital tax.
Spain’s new tax will apply to companies with at least €750mn in global revenue and digital sales of at least €3mn in Spain.
The Spanish government, led by Socialist Prime Minister Pedro Sanchez, also approved a tax on financial operations on Tuesday. Lawmakers in Madrid are expected to approve both measures in the coming months.
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