10
Sep
2025
Watch
Taxation of large digital platforms in the light of international developments (debate)
Mr President, thank you Commissioner for joining us here this evening. I think we can all recall the scene from Scotland during the summer, where President von der Leyen painfully shook the hand of President Trump on a deal that only makes things harder and trade harder between the EU and the US. And I think it's in that context that we are discussing the principles that should govern global digitalised economy, particularly the taxation of digital services, this evening. Taxation is all about fairness, dynamism, efficiency. It's how we raise the revenue to fund goods and services. It's about investing in the future, creating opportunities for growth and for security. Taxation should support competitiveness, investment and job creation. And if it does not do this, then it's not serving the common good. When it comes to the taxation of large digital platforms, as with all elements of tax policy, it's all about making sure that neither goal is undermined. And that's why we seek to discuss this matter today. When capital is mobile and crosses international borders, how do we uphold the common good and also promote opportunity and investment? I think it's clear that global challenges like these require global solutions. And that's why it's right and proper that Europe has been such a leader in the negotiations of the OECD Pillar Two agreement. The agreement is a compromise that meets the realities of a digitalised economy. First, it sets out a minimum level of taxation on large companies, second, it introduces new rules for taxing the profits of large companies where they don't have that physical presence. Our commitment to multilateralism is unwavering. At a time when international institutions are being undermined as never before, it is right that the EU continues to strongly support the OECD process, but clearly we can't make any progress if everybody is not at the table. Regions of the world that act on their own or depart from global standards create fragmentation and perverse incentives. However, the return of Donald Trump as US President saw an executive order to withdraw his country from the agreement. That agreement was the result of so many years of hard work, so it's vital, I think, that that work and this agreement be protected by us as an absolute priority. We have seen the change of approach and temperament from the US President, and it sees the agreement as an attack on American businesses, and he is loudly promising retaliatory actions. However, that's not a reason for us to give up on the agreement. Walking away would not help to resolve them, indeed, it probably would exacerbate the problem. So we ask, where to now for the OECD negotiations, particularly in respect of Pillar One? How can the EU show leadership to keep this agreement on the table? We've seen proposals from the G7 for US-specific exemptions and allowances and they do require careful scrutiny, and I know the Members of this House will do so. But in the midst of this geopolitical discussion, we've also asked the Commission's views of calls to take unilateral action. I know that the question of new own resources is a separate matter, but it does remain part of the discussion. Does the Commission foresee unilateral action as a serious probability, and what would the threshold of this be? Multinational investment is an important part of the European economy. It provides jobs, opportunities, vital government revenues across the EU, both directly and indirectly. And millions of our citizens rely on this investment to earn their livelihoods. That's why departing from multilateral processes presents huge risks and will not yield the benefits that some people say it will. It's not about threats of retaliation, it's about showing that Europe is the place to do business and not creating imbalances that will drive our investment away. Is the Commission still committed to international engagement? Does it still recognise the economic hurdles that would exist if we departed from that engagement? I think we are living currently in a period of huge economic uncertainty. There is regular turmoil on international markets and jobs announcements are being reassessed. So when it comes to tax policies, Europe does face big challenges. And while tax is rightly a Member State competence, the growth of divergent sectoral taxes creates internal trade barriers and undermines our EU economy. So instead of calling for new taxes, we should be looking at ways to better calibrate the ones that we already have – and we have plenty – so that they do not create additional burdens or barriers for investment. Finally, Commissioner, specifically in relation to the digital services tax, I think it's crucial that we take an evidence-based approach. If the Commission is looking at this option, will it commit to a comprehensive cost-benefit analysis to reduce unforeseen consequences? Everyday, people, as normal, are using digital tools and services. The digital economy is at the heart of every single one of our lives, and there is almost no way that a tax does not ultimately impact consumers in some way. It's extremely unlikely that any DST would similarly be passed on in higher charges of subscriptions to the people that were served. It's commonly said that there are only two certainties in life: death and taxes. And I think when it comes to the latter, we need to be responsible, forward-thinking and results orientated.