Benjamin Godfrey is a blockchain enthusiast and journalists who relish writing about the real life applications of blockchain technology and innovations to drive general acceptance and worldwide integration of the emerging technology. His desires to educate people about cryptocurrencies inspires his contributions to renowned blockchain based media and sites. Benjamin Godfrey is a lover of sports and agriculture.
The move by Spain and France to tax the digital services provided by U.S. top firms can push the United States to do the same.
Spain and France are reportedly set to raise new funds by imposing special tax on top digital firms including Google LLC (NASDAQ: GOOGL) (NASDAQ: GOOG), Facebook Inc (NASDAQ: FB) amongst others. Per a Reuters report, Spain in its proposed budget sent to the European Commission on Thursday is looking to raise about 6.8 billion euros ($7.96 billion) in 2021 through the taxation of companies involved in digital services, potentially harmful products including plastics as well as sweetened beverages.
The coronavirus pandemic undoubtedly left a dent amongst nations in the European Economic Area particularly as it relates to the economy and the strain has informed the plans by many to raise additional revenue through taxation. In achieving this agenda, most governments in the EEA including Spain, and France to mention a few are targeting digital service providers who have enjoyed a tax rate of about 9.5% as against the rate paid by traditional companies in the region which is pegged at about 23.2%.
In the proposed budget, Spain projected a budget deficit of 7.7% with a corresponding projected economic rebound of 7.2%. This figure is ambitious when compared with the expected 11.2% economic recession for this year as well as a budget gap of 11.3%
With the Spanish Parliament giving its approval to the 3% tax to be levied on such digital services as adverts despite concerns that the U.S. government may see the move as an attack on its homegrown companies will raise about 1 billion euros in 2021. The Tobin tax policy, a means to charge a 0.2% tax on large-cap publicly listed companies will raise about 850 million Euros in the coming year. Sweetened beverages will also receive a 20% tax charge, double what it has always charged.
Spain and France Push Models U.S. Tax Policies on Big Tech Firms Like Google
As noted by Somag News, the move by Spain and France to tax the digital services provided by U.S. top firms apparently model the move by the United States to do the same. The news outlet noted that the firms strategically channel their profits through foreign headquarters like Facebook’s headquarters in Ireland, where the tax rates are generally low.
Coinspeaker.com reported back in August that Senator Bernie Sanders’ tax bill which is targeted at corporations who made excessive gains during the coronavirus pandemic will hurt the same firms also being targeted by the new EU moves. The resort to taxation is basically a veritable means to pull up for use to place the economy on a recovery path and most of the tax burdens are generally passed down to companies particularly those of foreign origins.
Should the current projections go well, Spain will rake in about €33.4 billion in public revenues in 2021 and this figure will be fueled by its laid down fiscal measures similar to those of France and other EU nations.