Germany to Impose Digital Tax at Rate of 10%
Germany Weighs Proposal for 10% Digital Tax on Internet Giants
In a move aimed at addressing tax evasion by global internet companies, Germany is considering substantial changes to its tax laws. Wolfram Weimer, the new Minister of State for Culture and Media, has spearheaded the proposal to levy a 10% tax on digital advertising and marketplace revenues of major international internet platforms such as Google and Meta.
Weimer, in an interview with "Stern," stated, "Something must change now. Germany is increasingly becoming dangerously dependent on the technological infrastructure of the Americans." The proposed tax, modeled after Austria's platform tax, would help alleviate this dependence and offer a small tax contribution from the companies to the society.
Criticizing the business practices of large platforms, Weimer pointed out that they have been operating with sophisticated tax avoidance schemes, which he considered to be unsolicitous. While the companies claim that such a tax might increase prices for end-users, the minister contended that their margins would merely decrease slightly.
The Union, currently a part of the black-red federal government, appears to support the initiative, despite initial concerns about potential trade friction with the US. Weimer expressed optimism that there could be a unified assessment between the Union, SPD, and Greens regarding this matter.
The tax proposal is part of the coalition agreement between the Union and SPD, signaling strong political backing for the measure. The Union and SPD had earlier agreed to examine a tax for online platforms that use media content. The plan falls under the responsibility of the State Minister for Culture and Media.
The proposed digital tax is not a new concept, with countries like the UK, France, Italy, Spain, Austria, Turkey, India, and Canada already implementing similar measures. However, the US has previously viewed such taxes as discriminatory and threatened retaliatory tariffs against countries imposing digital service taxes on US technology companies.
Currently, there is no unified digital tax policy within the European Union, but several member states have enacted their own measures. Global coordination efforts through the OECD’s Pillar 1 initiative to create a comprehensive framework for taxing digital services have stalled, with the US withdrawing from negotiations in February.
While the German proposal is still under consideration and negotiation, it marks a significant step towards addressing the longstanding issue of tax revenue from large international internet companies. The process may be complicated by international trade tensions and ongoing discussions about digital taxation on a global scale.
The Commission has also been consulted on the draft budget, given the financial implications of the proposed digital tax. This development in the domestic politics of Germany, which involves increasing the tax burden on internet giants, underscores the prevalence of this issue in general-news and business circles.
