Digital economy taxation — EU launches public consultation

Digital taxation — EU launches public consultation

The EU is asking for public input as it prepares to introduce a potential EU-wide digital tax by January 1, 2023

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The European Commission (EC) is opening the floor to feedback as they consider proposals for implementing an EU-wide digital tax. The EC launched a public consultation, asking stakeholders for input on an inception impact assessment, and to respond to a detailed questionnaire about challenges and potential solutions related to taxing the digital economy.

The deadline for feedback on the impact assessment is February 11, 2021 and responses to the questionnaire must be completed by April 12, 2021.

Background

The EU has contemplated the implementation of EU-wide measures to address the challenges of taxing the digital economy for several years, however their efforts have been put on hold in anticipation of an OECD agreement. As the OECD continues to pursue a global solution, the EU is now moving ahead with its own proposal expected by June 2021, with plans to introduce a digital tax by January 1, 2023.

The EC has confirmed that its legislative proposal would take into account any agreement reached by the OECD, and would identify additional measures such as:

  • A corporate income tax "top-up" to be applied to EU companies conducting certain digital activities
  • A tax on revenues realized from certain digital activities conducted in the EU
  • A tax on digital business-to-business transactions conducted in the EU

Public Consultation

The EC is seeking information from stakeholders on the impact assessment to better understand the expected economic, social and environmental impact of a digital tax.

Additionally, the detailed questionnaire asks stakeholders to provide their views on:

  • Challenges of taxation in the digitalized economy
  • Possible solutions to address these challenges
  • The appropriate level for solving these issues (e.g., national, EU, beyond the EU, or some combination of these levels)
  • The scope of the digital levy
  • How to determine where digital revenues are to be taxed

For more information, contact your KPMG advisor.

Information is current to January 25, 2021. The information contained in this publication is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act upon such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's National Tax Centre at 416.777.8500

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