May ECOFIN: digital taxation and changes to black list
At its May 2019 session, the Economic and Financial Affairs Council approved changes to the EU black list. Ministers also exchanged opinions on the taxation of the digital economy before the upcoming debate at the G20 summit in June.
EU member states have not yet agreed on a common approach to the digital tax setup. The European Commission therefore strongly recommended that a consensus be reached before the June G20 summit in Japan where the topic is to be debated at the OECD level. At the ECOFIN meeting in May, European finance ministers were trying to find a common standpoint.
The Czech government decided not to wait for a common EU approach and will introduce a 7% digital tax on selected internet services rendered in the territory of the Czech Republic. Placement of targeted advertising, use of multilateral digital interfaces, and sale of user data will be taxed under a law that will enter into effect in the middle of 2020, and is to be published soon. We recommend that companies that generate revenues by using the digital space and whose turnover exceeds EUR 750 million or who are a part of a group with such a turnover should be watching this area closely, and perhaps already approach us at this stage.
Barbados, Bermuda and Aruba no longer on black list
The EU black list is a list of non-cooperating tax jurisdictions kept by the European Union as a part of its effort to limit tax evasion and promote tax transparency and fair taxation. Since its introduction in December 2018, it has been revised continuously. At the moment, twelve jurisdictions remain on the blacklist: American Samoa, Belize, Dominica, Fiji, Guam, Marshall Islands, Oman, Samoa, Trinidad and Tobago, United Arab Emirates, American Virgin Islands, and Vanuatu.
At the ECOFIN meeting in May, the eighth revision of the black list took place, as a result of a monitoring process showing that ten jurisdictions had not delivered on their commitments within the stipulated deadline. Three states – Barbados, Bermuda, and Aruba – were taken from the black list. The list of non-cooperating jurisdictions will continue to be updated regularly. So far, the Czech Republic has not introduced any direct sanctions or measures in connection with the above blacklisting.