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Czech Republic to introduce Europe’s highest tax on digital giants

Prague, Czech Republic – The Czech government announced it would introduce a 7% digital tax in a bid to target internet giants like Google, Amazon, Apple and Facebook.

Czech government to pass 7% digital tax

The measure is expected to bring in 5 billion Czech crowns (more than 200 million euros) to the state budget, according to calculations from the Ministry of Finance.

“The digital tax will apply to the most important global companies and responds to the failure of EU-level negotiations as well as the slow progress of finding a global solution”, Czech Finance Minister Alena Schillerová (ANO) said.

The ministry spokesman also announced that the government will soon determine the minimum turnover, probably set at 750 million euros and more, in order for the new measure to apply to digital giants without presenting a financial burden for smaller businesses. According to preliminary reports, the measure would specifically focus on revenues stemming from targeted advertising and sale of personal data, and also include sharing-economy platforms.

According to local media, the Czech government expects to draft the bill by the end of the month for the new tax to take effect next year. It would be the highest digital tax to be implemented in Europe so far and “could set an example for bigger neighbors and even the U.S.”, according to Bloomberg.

Failure of an EU-wide tax on e-giants

After EU-wide negotiations, spearheaded by France, have stalled due to the persistent opposition from several member states, several European countries have implemented or are contemplating introducing a similar tax.

Digital giants like Google, Apple, Facebook and Amazon (known as the GAFA) have come under intense scrutiny from European lawmakers and citizens in recent months, for what many see as their unchecked tax optimization schemes based on rerouting their profits to low-tax EU member states like Luxembourg, Ireland or the Netherlands.

A 5% digital tax is due to come into effect in 2020 in Austria, while France also approved a 3% digital ‘GAFA tax’ on internet companies with a turnover above 750 million euros, expected to bring in 400 million euros in 2019, according to French Economy Minister Bruno Le Maire.

Poland is reportedly also considering a digital taxation scheme, “with effect from next year”, deputy finance minister Filip Switala told Bloomberg reporters a few days ago.