• 214 days Could Crypto Overtake Traditional Investment?
  • 219 days Americans Still Quitting Jobs At Record Pace
  • 221 days FinTech Startups Tapping VC Money for ‘Immigrant Banking’
  • 224 days Is The Dollar Too Strong?
  • 224 days Big Tech Disappoints Investors on Earnings Calls
  • 225 days Fear And Celebration On Twitter as Musk Takes The Reins
  • 226 days China Is Quietly Trying To Distance Itself From Russia
  • 227 days Tech and Internet Giants’ Earnings In Focus After Netflix’s Stinker
  • 231 days Crypto Investors Won Big In 2021
  • 231 days The ‘Metaverse’ Economy Could be Worth $13 Trillion By 2030
  • 232 days Food Prices Are Skyrocketing As Putin’s War Persists
  • 234 days Pentagon Resignations Illustrate Our ‘Commercial’ Defense Dilemma
  • 235 days US Banks Shrug off Nearly $15 Billion In Russian Write-Offs
  • 238 days Cannabis Stocks in Holding Pattern Despite Positive Momentum
  • 239 days Is Musk A Bastion Of Free Speech Or Will His Absolutist Stance Backfire?
  • 239 days Two ETFs That Could Hedge Against Extreme Market Volatility
  • 241 days Are NFTs About To Take Over Gaming?
  • 242 days Europe’s Economy Is On The Brink As Putin’s War Escalates
  • 245 days What’s Causing Inflation In The United States?
  • 246 days Intel Joins Russian Exodus as Chip Shortage Digs In
  1. Home
  2. News
  3. Breaking News

Tech Giants Could Be First Victims Of U.S. Trade War

Tech

In a backlash over Trump’s harsh steel and aluminum tariffs, Europe is fighting back with a proposed tax targeting the revenue of U.S. tech giants to level the playing field.  

On Wednesday, the European Commission proposed rules that would make companies such as Google and Facebook pay a 3-percent tax on turnover on various lines of services in the European Union.

Broadly, the tax plan would target companies that are based on users for value creation through advertising, search engines, social media and data-mining. So it could also possibly affect Uber and Airbnb if implemented.

According to the Financial Times, the proposed plan offers an exemption for e-commerce groups, so online retail behemoth Amazon could be spared—in part. Some of the new rules may apply to Amazon’s marketplace transactions.

Media groups and telecommunications companies would also be exempted.

Specifically, the tax would apply to companies with over $920 million in annual global revenues, and over 50 million euros in taxable EU revenues annually. 

It’s a bill that could earn over $6 billion for EU coffers—if it makes it through the labyrinthine bureaucracy of EU states and lawmakers.

This goes beyond retaliation for Trump’s tariffs, though. Related: The Secretive Wall Street Firm Betting On Bitcoin

The EU has had an issue for some time with tech giants it says aren’t paying their fair share of taxes, and its anti-trust authorities have been investigating Amazon, Google and Apple for possible anti-trust violations.

The European Commission claims that the top digital companies are paying only 9.5 percent in average taxes, compared to over 23 percent that traditional companies pay, the BBC reported.

Brussels’ feathers have also been ruffled by the trend for tech firms to re-direct profits to Ireland and Luxembourg—two key tax haven destinations in Europe—to avoid paying their dues. That’s exactly why the new proposal targets revenues instead of profits.

But passing a tax law such as this won’t be easy in an increasingly fractured European Union. The benefits won’t be equal, and smaller countries won’t see any income boost from such a move, while bigger countries can expect a tax windfall. In the meantime, the smaller countries risk the ire of tech giants they are eager to lure in for investment, analysts told Reuters.

The EU announcement comes amid mounting troubles for Facebook in particular.

The social media giant’s stocks have tanked this week amid an investigation into its role in allowing a political consulting company to harvest the personal data of over 50 million users to help win the 2016 elections. Since then, no one has heard from Facebook CEO Mark Zuckerberg, and on Tuesday and group of shareholders upped the ante with a lawsuit over the issue.

Shareholders behind the lawsuit blame Facebook’s share price dive on failure to safeguard privacy after revelations that user data was being harvested inappropriately.

Related: Spending Bill Could Cause U.S. Debt To Soar To 99% Of GDP

More trouble may be ahead as well.

Darren Robbins, a securities class action lawyer, told Bloomberg that Facebook as “potential culpability in a number of areas”.

“Whether liability from users, government regulators or investors follows, there are implications for our society given the unique position Facebook occupies in the daily lives of Americans,” he said.

By Michael Kern for Safehaven.com

More Top Reads From Safehaven.com:

Back to homepage

Leave a comment

Leave a comment