In the waning days of its EU presidency, the Austrian government said it would introduce a domestic version of the digital services tax (DST). The unilateral plan is following France's new levy on the so-called GAFA companies: Google, Apple, Facebook, and Amazon.
The Austrian government is reportedly planning to introduce its own domestic digital services tax (DST) based on the proposed directive for an interim 3% DST at the level of the EU. The domestic plans follow the end of the Austrian Presidency of the Council of the European Union on 31 December 2018, during which Austria attempted to achieve consensus on an EU-wide DTS but was ultimately unsuccessful.
On December 29, Chancellor Sebastian Kurz said that while there is an understanding that there should be an EU-wide DST as EU member states basically agree in principle that there is a need for such a tax, Austria will “take a national step” and introduce its own version of the tax. “Our aim is clear: taxation of internet giants making large profits online but barely paying taxes — such as Facebook or Amazon,” Kurz said in a statement. “It is only fair that Internet giants in Europe pay their fair share of taxes.”
Under EU law, US technology giants such as Google and Amazon can choose to report their income in any member state including the low-tax jurisdictions such as Ireland, the Netherlands or Luxembourg. Subsequently, such firms, on average, pay a tax rate 9 percent on average, compared to 23 percent for traditional companies, according to Margrethe Vestager, the EU competition commissioner.
Austria’s plans to implement its own DST parallel efforts by France, Korea, Spain, and the United Kingdom, which have each announced they will go ahead with their own domestic versions of the tax.
The basic framework of the Austrian scheme is expected to be announced during a government summit Finance on January 10th-11th. The Chancellor reiterates that minister Hartwig Loeger is working on the proposal details. The proposal will likely come into force in 2020, as it will be part of a tax reform.
One of TPA’s technology partners Cygnet Infotech has developed a comprehensive VAT solution named R7VAT MTD, which is amongst others recently approved by HMRC for use by companies in the UK to automate and manage their VAT returns filing process but can also be used broadly within the EU.
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