Digital service taxation is an area long recognised as ripe for reform. EU leaders have been demanding an “effective and fair taxation” system to ensure a “global level playing field” since last year.
The idea that businesses should only pay tax in the country where they are based has seen countries receive paltry sums, with the European Commission estimating that tech giants pay an average tax rate of just 9.5 percent in Europe (compared to 23.2 percent paid by other organisations).
It’s for this reason that the G20 and the OECD are seeking to identify an international solution to the problem. But, arguing this could take some time, the European Commission has been quick to seize the initiative, grabbing its slingshot, and drafting two Digital Service Tax proposals in March with the potential to affect 120-150 tech giants.
Gresham House Strategic PLC (LON:GHS) has a 3.4% ownership of Tax Systems PLC, correct as of 31 January 2018 month end NAV announcement, released 1 February 2018.