The proposed EU digital services tax: Effects on welfare, growth and revenues
The proposed EU digital services tax: Effects on welfare, growth and revenues
In March 2018, the European Commission proposed a Digital Services Tax (DST) as a new tax on revenues resulting from certain digital business activities. Specifically, a 3% tax on: (i) Online advertising revenues, (ii) Seller/buyer fees to transact via online intermediaries/marketplaces and (iii) Revenues from the sale of user data. We have reviewed the evidence base and analytical logic of the proposal. We find that:
The rationale for introducing DST does not reflect the evidence that digital firms pay average corporate tax rates
The Impact Assessment (IA) for the DST does not fully consider the substantial distortions and costs to EU consumers and firms from this new tax
Actual revenues from the proposal are likely to be significantly lower than suggested
The study is commissioned by Computer & Communications Industry Association (CCIA).
Download an executive summary in German
Download an executive summary in Spanish
On 20 September 2018, former Partner Sigurd Næss-Schmidt presented the results at a CEPS event in Brussels with the European Commission, OECD, and national experts discussing the basis and the practical implementation of digital taxation, options and challenges. Download the presentation from the event.
On 24 October 2018, Bertelsmanns Stiftung – a German think-tank – and Copenhagen Economics held a seminar in Berlin discussing the future of taxation for the digital economy and how to promote the digital- and other knowledge-intensive industries in the EU. In this context, former Partner Sigurd Næss-Schmidt recapped the key messages from our study on DST and outlined some of the key challenges that needs to be addressed in the context of getting a robust tax system in place which promotes the value creation and innovation at national and global level. Download the presentation from the event.
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