ICC Comments on the 2021 EU Consultation on Fair Taxation of the Digital Economy

ICC welcomed the opportunity to provide input on the 2021 European Commission consultation on fair taxation of the digital economy.

The current initiative for a new digital levy aims to “ensure fair taxation in the digital economy, while at the same time contributing to Europe’s recovery.” ICC respectfully acknowledges the commitment by the European Commission (EC) to establish a common approach on the taxation of the digital economy that would provide an efficient tax framework that stimulates economic growth and job creation in the region.

ICC fully supports a harmonised approach to ensure that international tax rules remain relevant and applicable in an increasingly digitalised global economy. In this respect, ICC provided input underlying the need for global co-operation and co-ordination within the OECD Inclusive Framework. ICC advocates for a consistent global tax system, founded on the premise that stability, certainty and consistency in global tax principles are essential for business and will foster cross-border trade and investment. As such, ICC reiterated the importance of a collaborative global approach and that any new measures should be developed on the basis of international tax rules and seek an alignment with global efforts to ensure consistency and coherence, be non-discriminatory and avoid double and over-taxation.

ICC remains concerned that exploring proposals for an EU digital levy in parallel to ongoing work within the OECD Inclusive Framework could undermine existing efforts to reach global agreement.
ICC believes that the EU and its Member States should continue focusing their efforts on supporting and advancing the ongoing discussions within the OECD Inclusive Framework, with the aim of reaching agreement on a multilateral solution by the mid-2021 deadline.

Unilateral disparate tax rules that introduce double or multiple standards create compliance challenges for business, risk double taxation, and undermine the consistency of the international tax system. Such measures should be withdrawn at the time a political agreement is reached.

In the context of a global financial crisis due to the COVID-19 pandemic, ICC highlighted the current fragility of the global economy and that the need for pro-growth tax policies is particularly important.

ICC deems necessary that the scope of a possible digital levy should be based on thorough economic impact analysis and not specifically target digital businesses. The digital economy is the fastest-growing, most vibrant part of the economy that will drive future prosperity in Europe. ICC, therefore, holds that the digital economy should not be ring-fenced and targeted with discriminatory tax measures. ICC reiterates that any solutions should be capable of accommodating evolutions in business models and should have broad adoption by countries to allow for a seamless application for business.