Comments to the European Commission on Its Proposed Digital Levy

The European Commission is conducting an inception impact assessment to receive feedback about a proposed “digital levy” to be introduced as a legislative proposal later in 2021 and enacted before January 1, 2023. As part of this process, ITIF filed comments advising the Commission not to introduce such a tax. ITIF explained the many reasons why the planned digital levy is a misguided recommendation, and urged the Commission pursue a more reasonable path:

• If the EU wants to be credible in its calls for transatlantic tech partnership, it must stick to ongoing discussions, particularly the OECD BEPS track 1 on profit shifting. Otherwise, any future multilateral initiatives may lack credibility.
• The Commission should prevent member states from adopting national digital taxes, because it would fragment the Digital Single Market.
• European Commission should preserve the fundamental proposition that profits, not turnover, provide the tax base.
• European Commission should avoid taking policy stances aligned with tech-populism and instead adopt a posture of tech-opportunism to accelerate the economy’s digital transformation.