Opinion Former Article

Europe’s digital tax may be toned down but unilateral move a worry, says CIOT

Commenting on today’s unveiling by the European Commission of its plans on the taxation of the digital economy, Glyn Fullelove, Chair of CIOT’s Technical Committee, said:

“We are concerned at the repercussions of the European Commission making its mind up that action in the EU is required, rather than further work to find a multilateral solution that involves non-European countries such as the USA. The European Commission’s proposals are broader and even more likely to lead to disputes and double taxation than the measures that the UK Treasury has recently started consulting on.

“In relation to the interim measures, at a level of three per cent the levy would imply unrealistically high levels of profit attribution to the EU for many companies comparing the burden of the tax with the burden of conventional profits based taxation and thus would likely give rise to double taxation.

“It is not clear that a turnover-based tax, particularly at rates as high as three per cent, would be fully and effectively creditable against profits based taxes.

"The measures need to be agreed by member states and may well be toned down; the longer term measures depend on tax treaties being changed which may well be challenging where the USA in particular is involved.”
Notes for editors

1.       The Chartered Institute of Taxation (CIOT)

The CIOT is the leading professional body in the United Kingdom concerned solely with taxation. The CIOT is an educational charity, promoting education and study of the administration and practice of taxation. One of our key aims is to work for a better, more efficient, tax system for all affected by it – taxpayers, their advisers and the authorities. The CIOT’s work covers all aspects of taxation, including direct and indirect taxes and duties. Through our Low Incomes Tax Reform Group (LITRG), the CIOT has a particular focus on improving the tax system, including tax credits and benefits, for the unrepresented taxpayer.

The CIOT draws on our members’ experience in private practice, commerce and industry, government and academia to improve tax administration and propose and explain how tax policy objectives can most effectively be achieved. We also link to, and draw on, similar leading professional tax bodies in other countries. The CIOT’s comments and recommendations on tax issues are made in line with our charitable objectives: we are politically neutral in our work.

The CIOT’s 18,000 members have the practising title of ‘Chartered Tax Adviser’ and the designatory letters ‘CTA’, to represent the leading tax qualification.

Contact: Hamant Verma, External Relations Officer, 0207 340 2702 HVerma@ciot.org.uk (Out of hours contact: George Crozier, 07740 477 374)

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