Google, Facebook and Co. must pay taxes where they generate profit

The EPP Group wants transnational digital companies to pay corporate tax in the place where their profits are generated. At the same time, the Group rejects the idea of imposing unified minimum corporate tax rates across Europe.

"The physical location of companies does not play a role anymore in the digital economy. We need to bring the corporate tax system into the 21st Century", said Markus Ferber MEP, EPP Group Spokesman in Parliament’s Committee on Economic and Monetary Affairs, ahead of today’s vote. Parliament votes today on a Resolution on 'Fair taxation in a digitalised and globalised economy'.

"Corporate tax systems are still organised around the idea of physical plant locations, supply chains, factories, technical equipment and physical output. This is totally outdated. Digital companies need little more than a web server somewhere in the world. This is why we need the concept of a 'virtual place of permanent establishment' to make sure that Google, Facebook and Co. pay taxes where they generate profit", Ferber explained.

The EPP Group also firmly insists on finding international solutions. "The Organisation for Economic Co-operation and Development’s (OECD) so-called Action Plan against Base Erosion and Profit Shifting (BEPS) has been a success in combating tax avoidance and tax evasion. The OECD must now make it an international standard to tax where profits are generated", Ferber stressed.

But Ferber rejects the idea of unified minimum corporate tax rates across Europe. "We need to harmonise what is taxed and where we tax internationally, but we do not want to abolish tax competition altogether. Member States should remain free to set their tax rates at the level they desire", Ferber said on behalf of the EPP Group.