ICC comments EU consultation on fair taxation in the digital economy

ICC response to the European Union (EU) Consultation on the fair taxation of the digital economy

The draft aims to submit international business views with respect to taxation of the digitalised economy.

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

The digital economy is not only revolutionising the way businesses operate but also creates new opportunities for global growth and prosperity. If nurtured appropriately, technological advances and digital connectivity can spur innovation in business models, business networking and knowledge transfer while also facilitating access to international markets for businesses of all sizes. Ensuring that the digital economy is taxed effectively and in a way that ensures fairness and supports growth is clearly high on the European Commission (EC) agenda.

This was evidenced by their recent communication to the European Parliament and Council on a Fair and Efficient Tax System in the European Union for the Digital Single Market. ICC welcomes the EC public consultation on the fair taxation of the digital economy as an integral part of this process and is pleased to submit international business views with respect to the taxation of the digitalised economy.

ICC provided input underlying the importance of a consistent and coherent global approach that fosters cross-border trade and investment. To this end, ICC respectfully acknowledges the EU goal of a common approach to taxation and efficient tax framework. ICC also reiterates that a collaborative approach with the OECD and business is highly recommended as a means of achieving this goal in a manner that ensures alignment with global efforts to address new challenges and opportunities to the digital economy. Specifically, ICC supports the OECD Base Erosion and Profit Sharing (BEPS) Action 1 Report, which concludes that the nature of the digital economy is increasingly becoming the economy itself, and would make it extremely difficult to separate the digital economy for tax purposes. The inventing of an entirely new taxation system threatens to create greater disruption than making significant changes to the existing taxation scheme, as the implementation of the BEPs action items already address many of the perceived actions of the digitalised economy. In line with this, ICC respectfully urges the EC to consider the broader implications of implementing targeted temporary actions rather than long-term comprehensive solutions.