Online streaming giants including Netflix Inc. and Amazon.com Inc. are being targeted under new rules widening the scope of a proposed 3% tax on digital companies' revenues in Europe.
Members of the European parliament on Dec. 13 voted by an overwhelming majority for the amendments, extending the list of services that qualify for the region's proposed crackdown on tax avoidance to digital content providers. Lawmakers are pushing to have the laws approved by April 2019.
Under the changes, Europe's digital services tax will also target companies involved with the supply of content including video, audio, games, or text on a digital platform, regardless of whether they own the content or have acquired the rights to distribute it. Politicians also voted to lower the minimum threshold for EU revenues liable for taxation from €50 million to €40 million.
They added, however, that the new policy would remain a temporary framework while broader, permanent schemes are negotiated by the Organisation for Economic Co-operation and Development and the United Nation's G-20.
Europe this year unveiled plans for a digital tax this year on the revenues of tech companies with an annual global revenue of more than €750 million. At the time, the proposals were expected to generate about €5 billion per year for EU member states. The plans earlier faced resistance from countries including Ireland, Finland, Denmark, Sweden and Luxembourg, while others, including France, Germany and the U.K. have chosen to usher in their own digital levies.
France and Germany are planning a 3% tax on the digital advertising revenues of online giants including Facebook Inc. and Alphabet Inc. from 2021 if a wider, global framework is not agreed before then.
Meanwhile, the U.K. earlier announced a 2% tax on the digital revenues generated in the country by profitable tech companies with at least £500 million a year in global digital sales. British lawmakers will also consider adopting a globally agreed solution to taxation in place of the proposed digital levy.