The digital tax should be addressed at the OECD level

The first contribution of the Confederation of Industry of the Czech Republicto the consultation of European Commission to the topic of Digital Levy:

  • The Confederation of Industry of the Czech Republic prefers the solution including all crucial countries which represents consensus at the OECD level. OECD consensus represents a relevant effort to modernise the tax system and to adapt the current tax system to the structure of the economy where new forms of digital business appeared (and for these new forms of business the tax system is not properly designed).
  • We consider it important to avoid the tax burden for European tax subjects that will increase as a consequence of the effort to find a solution for current tax imbalances.
  • In spite of that, the EU initiative is slightly more suitable compared to individual and uncoordinated initiatives of member countries. We, for many reasons, prefer the solution on wide basemen as much as possible. The digital area is in essence global so even tax measures must have maximal global coverage (and thus would cause minimum distortions).
  • We prefer the consensual OECD solution and hope that the OECD platform will be able to demonstrate the ability to achieve a specific results in following months (and these results must be acceptable and approvable for all involved countries). Otherwise the EU (ideally) after coordination with USA (for elimination US countermeasures) must find another solution for current tax imbalances in the digital sector (e.g. through a unified tax approach to the digital sector within the EU).
  • We advise the EU to strengthen all efforts to find consensus at OECD level, which represents a wider range of countries where there are settled digital companies, consumers, and users as well and on whose territory economic activity takes place without tax consequences.
  • In spite of that, the EU digital levy seems only as a general discussion document from our point of view, and the effort to tax the area of B2B services is really harmful. This has the ability to make company inputs more expensive.
  • We do not think that it is a good idea to tax activities and companies only due to the fact that they deal in the digital area. Some proposed ideas in the EU document we consider risky in relation to the development of the digital area. We find it proper to build on the effort of finding OECD consensus and to try to modernise the tax system regarding modern tensions in the global economy.

Author: Vladimír Štípek

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