US, Europe Turn upon Tech Giants
The countries of Europe and the United States have taken up arms against the world’s leading digital companies, which are considered among the most technologically advanced, writes CNBC. The countries want to change the principles of tax and antimonopoly regulation.
It is about GAFA, a group of four companies named by the first letters of their names: Google, Apple, Facebook and Amazon. At the end of July, their representatives spoke at the US Congress, which is conducting an antitrust investigation into GAFA’s activities in the national market.
The European Parliament adheres to a similar position. The MPs believe that the dominance of digital companies negatively affects competition, innovation, consumers and, ultimately, the economy as a whole. Interlocutors of the publication from among the MEPs believe that the legislature will intensify proceedings against GAFA in the fall.
The claims and concerns of European and American lawmakers also extend beyond the group of the largest digital companies. In their opinion, the digital economy as a whole requires a fundamentally different approach to regulation, since many standard rules do not apply to it. For example, marketplaces and app stores for smartphones occupy too much market share, taking advantage of the fact that smaller players are forced to cooperate with them.
In addition, over the past few years, Europe and the United States have been talking about the need to reform tax laws regarding the profits of digital companies. The specifics of their work allow them to register in low tax jurisdictions such as Ireland and pay taxes to the local budget. At the same time, the countries where the buyers of their products and services (software, subscriptions to TV channels and online cinemas) are located and in which transactions are actually carried out, remain without tax deductions.
The European Commission estimates that the effective income tax rate for most digital companies in recent years has been nine percent, while the EU average is 23.2 percent. The difficulty in reforming legislation lies in the need to develop an agreed position of all 27 EU member states (which has been achieved so far), as well as in the reluctance of the leaders of the largest companies to contact the authorities. The only one to break the trend was the founder, largest shareholder and head of Facebook, Mark Zuckerberg, who addressed the European Parliament in 2018.