The new digital service tax is still the subject of arrangements at European Union level. Member States have not established a common approach in this respect, and some, such as Italy, have already introduced web tax into their tax system. Poland participates in talks, but does not take concrete steps.
Work is ongoing on the introduction of digital taxation and the introduction of a targeted and temporary digital services tax (DST) solution in the European Union. Poland supports the need to adapt international tax rules to modern business models in the digital sector. It has also supported reaching an agreement at EU level as soon as possible.
Internet Giants Without Tax
21 March The European Commission has proposed new regulations concerning the taxation of the digital sector. Taxation of digital services would take place in the territory of a Member State and should be 3% on profits generated in a given country from digital services i.e.
those in which the number of users exceeds 100,000, revenue from digital services exceeds 7,000,000 EUR, the number of business contracts exceeds 3,000, the benefits obtained from data provided by users, auction portals and marketplaces, subscriptions and e-sponsoring and as proposed by the MPPs the previous week, platforms providing digital content such as Netflix.
The aim of these rules is to impose on the largest players an additional obligation on the market that will level the competition rules and introduce legislation to regulate issues such as double taxation. The largest players, i.e.
those whose annual revenue exceeds the EU 40,000,000 EUR (EC in the project proposed 50,000,000 EUR) or 750,000,000 EUR on a global scale, such as Amazon or Google.
Transitional tax
The EU is also proposing to introduce a periodic tax on some of the digital revenues. Unlike a common EU reform of the basic tax rules, this indirect tax would apply to the revenue generated by certain digital activities which would completely escape from the current tax framework. The tax will apply to revenue generated from activities in which users play an important role in value creation and which is most difficult to capture through existing tax rules, such as these revenues:
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- created from the sale of online advertising space
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- created from digital indirect actions that allow users to interact with other users and which can facilitate the sale of goods and services between them
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- created from the sale of data generated on the basis of information provided by the user.
Shared opinions
It does not remain indifferent to the actions of the EC also the President of the United States, Donald Trump, who intends to challenge this solution to the World Trade Organisation. This is an important issue that most companies that meet the tax criteria are after second ocean side (Facebook, Uber, etc.). Some countries (e.g. France) announce that they will implement additional obligations in the digital sector, even if EU members do not agree.
The Polish government is looking into the matter and is willing to support the Council's resolution. The Ministry of Digitization declares that it collects data for the report to help secure Poland's interests.
In the opinion of the Polish Ministry of Finance, the direction of changes with regard to the system of international taxation of the digital economy, proposed by the European Commission in draft directives, is consistent with the fiscal interest of Poland.
In this context, the Council of Ministers gave its general support to the design of both the draft Digital Plant Directive and the draft Directive on the taxation of selected digital services, published by the European Commission on 21 March 2018
Author:
Justyna Kyć - Legal adviser in the Legal Department of 2017 associated with Russell Bedford Poland. He specializes in corporate customer service, in particular in drawing up and negotiating commercial contracts and providing ongoing legal advice.