Tech group blasts EU push for higher taxes

Tech group blasts EU push for higher taxes
© Getty Images

The tech industry is pushing back against the European Union’s calls for higher taxes on their profits.

In a letter to the Organisation for Economic Co-operation and Development (OECD) the Information Technology Industry Council (ITI) outlined its concerns with potential tax reforms in Europe.

ITI is a trade association that lobbies on behalf interests of major technology firms like Apple, Google and Microsoft in government, both domestically and abroad.


ITI Director Jennifer McCloskey focused her critiques less on higher rates and more on the impact of targeting tech companies.

McCloskey criticized “ring-fencing” digital companies into their own tax categories.

“Attempts to isolate business models with a predominate digital component as a separate sector of the economy would ‘require arbitrary lines to be drawn between was is digital and what is not,’” she wrote.

McCloskey floated instead a “simple, stable tax regime” for the entire economy.

The trade group also criticized a unilateral approach to tax policy saying that changes should be the result of multination discussions, that didn't step on any individual country’s tax policies.

McCloskey also raised concerns that tax hikes could hurt startups that are not yet profitable and raise costs to tech companies for items such as cloud computing.

ITI’s letter comes on the heels of an EU proposal in September that aims to bring taxes of tech companies closer to traditional businesses. Tech companies pay roughly 10.1 percent in taxes in Europe, compared to 23.2 percent to traditional businesses.

The proposal suggests “a tax on all untaxed or insufficiently taxed income generated from all internet-based business activities,” as potential solution to bridging disparity between the two rates.

At the time, ITI said that it respects “the European Commission’s desire to develop a tax code that works for its people, economy, and businesses.”

In the U.S., the technology industry is urging Congress to take action on tax reform before the end of the legislative session. White House officials have said that completing tax reform by the end of the year is a priority, but observers are skeptical that Congress will have time to pass it by the end of the year.