Deal on proposed EU digital tax possible by year end

The finance ministers of European Union (EU) member states have held talks on a proposed tax on large digital companies here on Saturday, with several believing agreement could be reached before year end.

The tax had initially been proposed by the European Commission in March, and would see a three-percent levy imposed on large global digital companies such as Facebook and Google, who may have little or no physical presence in Europe, and thus not be subject to a standard form of taxation.

Some states including Ireland, Sweden, Denmark, Finland, and Malta however oppose the measure, for reasons including that it could see revenue shift elsewhere, and stifle innovation.

Following the informal meeting, French Finance Minister Bruno Le Maire expressed optimism that EU states could reach agreement on the tax in 2018, Austria Press Agency reported.

He told journalists that concerns that this proposed "sunset clause" would not be legal is something the European Commission is working on.

German Finance Minister Olaf Scholz was somewhat more apprehensive on the proposed tax, however, arguing that more debate is required.

While acknowledging that agreement could be reached by the end of the year, he said there are a number of unanswered questions remaining, such as impacts on international taxation law and problems with dual taxation agreements.

Their Austrian counterpart, Hartwig Loeger, noted that EU states wish to conclude the matter soon.

"We have jointly come to agreement that we will continue to work intensively over the coming months with the goal of reaching a decision by the end of the year," he said.

He said the tax should be based around the earlier European Commission proposal, and should adopt the "sunset clause" proposal that would see the tax remain in place until such time that further agreement is reached with "international partners."

This would ensure that the digital economy makes a "fair contribution" to the tax revenues of individual EU states, he said.