EU likely to introduce revenue tax and virtual establishment in tax proposal

Bloomberg has revealed new details about EU’s tax reform proposals. The European Commission is likely to call for a temporary tax on the advertising revenue of large Internet companies, including Facebook and Google. Separately, the Commission will propose tax online platforms, such as Amazon, Ebay and Airbnb. The tax package, which is expected to be presented in March, will potentially include the concept of a virtual permanent establishment as well, requiring Internet companies ‘to have a taxable presence in each EU members state in which it does business’. The Internet industry in the USA responded with a joint letter to US Secretary of the Treasury, Steven Mnuchin, asking the Treasury to ‘strongly oppose efforts aimed at ring-fencing the digital economy and imposing short-term and long term special tax regimes on digital economy businesses.’