European countries call for new EU tax on tech giants

It’s safe to say that Google Amazon Apple Microsoft and other similarly large companies will fight tooth and nail if the call turns into definitive action

Currently, every company pays its share based on its profit, but that profit is often artificially lowered through elaborate schemes.

The concept of a "permanent establishment" came up in July due to France's calls for more taxation - a French court ruled in July that Alphabet Inc. owned Google was not liable to pay 1.1 billion euros ($1.3 billion) since there had been no permanent establishment in France for levying such taxes, since Google, like rival Apple, ran its operations in Ireland.

The finance ministers of France, Germany, Italy and Spain have sent a joint letter to the presidency of the EU (now held by Estonia) as well as the European Commission, saying the companies need to be taxed on total revenue rather than profits.

Corporation tax is paid on profits rather than revenue and firms operating over the internet have been accused of cutting their tax bills dramatically by declaring profits overseas instead of in the countries where their consumers are located.

A French court ruled in July that US Internet giant Google was not liable for Euro 1.12 billion ($1.27 billion) in taxes claimed by the state.

EU-wide tax measures must be agreed unanimously following a proposal by the European Commission. The four nations want the Commission to produce an "equalization tax" that would make companies pay the equivalent of the corporate tax in the countries where they earn revenue. Many digital platforms operating in the European Union are based in Ireland, which offers a low corporate tax regime, allowing Internet giants to escape a higher tax rate in other member countries. Back tax bills for billions suddenly pop out of nowhere despite the fact the countries they are based in say they have paid what they owe in full.

"You can not take the benefit of doing business in France or in Europe without paying the taxes that other companies - French or European companies - are paying".

For consumers, though, the move would likely be reflected in higher prices as said companies look to shore up their profits by defraying the increased tax burden onto their customers. If they had to pay more typical taxes in all European Union member states, they might pay billions more every year.

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