Up to six European countries have already announced that they will abandon the Digital Services Tax (DST) (known as the Google tax) after its failure to raise revenue, ElEconomista.com reports today. Spain, France, Italy, England, Austria and Turkey have expressed their intention to eliminate this tax and transfer their tax policy to the new international project, led by the US, on which the Organisation for Economic Co-operation and Development (OECD) is already working. These countries will wait for the OECD’s new tax rules to be approved before eliminating their Google taxes.
The OECD is negotiating with more than 130 countries to adapt the international tax system to the new digital reality. The current proposal would require some of the world’s largest multinational companies to pay part of their income taxes where their consumers are located. This is the so-called Pillar 1 of the tax transformation being prepared by the OECD.
Spain and the other countries will maintain their respective national digital taxes until that first pillar of the agreement on corporate taxation comes into force by 31 December 2023 at the latest.
From 2024, it will be assessed whether the taxes paid by the US multinationals affected by national digital taxes is higher than what they would have had to pay under pillar 1. If this is the case, Spain and the other European countries will have to pay these companies a tax credit for the difference between the two amounts.