Czech minister does not fear US retaliation over planned tax on internet giants

22-01-2020

The Czech Republic’s minister of finance, Alena Schillerová, says she does not fear retaliation from the United States over the Prague government’s planned digital tax, which is aimed at boosting the state coffers by taxing advertising by global internet giants such as Google and Facebook.

Alena Schillerová, photo: Filip Jandourek / Czech RadioAlena Schillerová, photo: Filip Jandourek / Czech Radio Speaking after a meeting of EU finance ministers in Brussels, Ms. Schillerová said the Czech lower house would begin debating the digital tax proposals next week.

A similar levy is already in place in France. It has sparked a spat between Paris and Washington in which the latter has threatened new American tariffs on French goods, a move that some worry could escalate into a broader trade war.

The Czech finance minister told journalists that she did not expect the United States government to impose retaliatory taxes on France.

However, she said, if the US did deploy such measures against any European country it would be a matter for the European Commission.

Minister Schillerová said she was not aware of any American demands with regard to her own officials’ plans to impose a special tax on the likes of Google, Amazon, Facebook and Apple.

However, the business daily Hospodářské noviny this week quoted a US government source as saying that Washington had in fact warned Prague not to bring in a digital tax.

Under Czech Ministry of Finance proposals, online companies with a global turnover of over EUR 750 million (CZK 18.8 billion) that have an annual turnover in the Czech Republic of at least CZK 100 million for the taxable services provided should be subject to tax in the country.

Firms would also need a reach exceeding 200,000 user accounts to come under the proposed tax bill.

Reports in November suggested the Prague government would impose a 7 percent digital tax, more than double the 3 percent imposed by France.

Ministry officials estimate imposing a digital tax on global internet players could generate an additional CZK 5 billion in revenues annually.

Photo: Gerd Altmann / PixabayPhoto: Gerd Altmann / Pixabay Ms. Schillerová says the tax should be in place for a four-year period. However, the Czech Republic would be ready to repeal the relevant legislation with immediate effect if a global solution were found, she said.

The European Union failed to reach a bloc-wide agreement on digital taxation in 2018.

The Czech finance chief says EU states should now push harder for a worldwide deal on a digital tax within the framework of the Organisation for Economic Cooperation and Development.

Her French counterpart, Bruno Le Maire, said earlier this week that agreement was close on a universal tax proposal put forward by the OECD but that the US had to take the “last step” to secure a compromise solution.

22-01-2020