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What Every Tech Company Should Know About Europe’s Digital Services Tax

The UK and the EU are eyeing big scores by drafting new tax laws aimed at tech companies, but Washington, and some Euro businesses are crying foul.

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What Do Businesses Think?

Sixteen European tech CEOs – including Spotify and -- issued a joint statement this week condemning the digital services tax proposal for potentially hobbling small businesses and startups.

“The proposed DST has been designed with large and highly profitable companies in mind, but will have a disproportionate impact on European companies, resulting in unfair treatment. Most start-ups and new companies rely on their revenues to grow and scale. The proposed DST would deprive these very businesses of an essential source of capital to reinvest in their growth, weakening their ability to compete globally.”

In addition, in the U.S. the Information Technology Industry Council, which calls itself the “global voice of the tech sector,” released a statement from president and CEO Dean Garfield calling the tax a “dangerous precedent.”

“The imposition of a digital tax poses a real and significant threat to companies in all sectors of the economy. While the notion of a digital tax isn’t new, the likelihood of its implementation is gaining momentum and its possible passage should be taken seriously by all major economies. We welcome the administration’s attention to this issue and share its concerns. Should a digital tax move forward, it would open the way for potential future tax policies affecting other industries that are increasingly digitalizing their operations. This would set a dangerous precedent, lead to double taxation, and raise potential violations with standing international tax treaties and trade commitments. We join the administration in urging the European Union to take a multilateral approach to address these complex and far-reaching tax policies and to finish the OECD process with the United States and other nations.”

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