MotionforaResolutionbytheCommitteeonEconomicandMonetaryAffairs

MOTION FOR A RESOLUTION BY THE COMMITTEE ON ECONOMIC AND MONETARY AFFAIRS (ECON)

#DigiTax: The COVID-19 pandemic caused a widespread shi to the digital services that brought forth a pressing need to update the corporate tax system by implementing digital taxation on earnings from online processes. With growing concerns that anEU-widedigitaltaxwouldhinderEurope’sdigitalisation,howcanthe EUbuildafairtaxsystem,whilesupportinginnovationinthedigitalfield?

Submittedby: RobertIatan(RO),AllenLi(FI),OonaMarttinen(FI),HenriPuura(FI), Dimitris Sideris (GR), Kirill Sorokin (FI), Mikko Xu (FI), Isidora Popaj (AL)

TheEuropeanYouthParliament,

A. Fully aware that the current tax structures are outdated, failing to include and taxatedataandknowledgesharingasameansofgeneratingrevenue, B. Concerned by the large discrepancies in the effective tax rate between traditional and digital businesses, with the traditional businesses being taxed at 23.2% comparedto9.5%fordigitalones, C. Aware that the high digital tax could harm Europe's economiccompetitiveness,as well as hurt European technological and entrepreneurial development in the globalscale, D. Realising that certainideologicaldifferencesbetweenMemberStatestogetherwith the existing Euroscepticism1 may cause barriers in the implementation of an

EU-widetax, E. Deeply concerned that the large difference between digital tax percentagesacross the EU encourages transnational companies to take advantage and locate in tax-havens,

1 EuroscepticismmeanscriticismoftheEUandEuropeanintegration. 21

F. Alarmed that companies can establish their physical presence inlow-taxcountries inordertobeliableforlesstaxpayment, G. Acknowledges efforts by international organisations, such as the Organisation for

Economic Co-operation and Development (OECD) , 2 and by several MemberStates, suchasFranceandItaly,tointroduceadigitallevy , 3 H. Noting that startups and other Small and Medium-sized Enterprises (SMEs) in the digital industry may not have enjoyed the same increases in revenues as larger digitalbusinessesexperienced, I. Conscious about the EU’s geopolitical relations withthirdcountries4 whichmaybe affected through the implementation of the digital tax on US and China-based big techcompanies;

EUlevelplayingfield

1. RecommendstheEuropeanCommissionimplementthedigitallevythroughoutthe

EUasameanstodisrupttheuseofnationaltax-efficientjurisdictions; 2. Requests the European CommissiontoprovideMemberStateswithinformationon thebenefitsofdigitaltaxation; 3. Suggests the EuropeanCommissiontolegislateforadigitallevytoincludetaxation on the generation and transfer of intangible digital assets and commodities, such asdata; 4. Recommends the European Commission to ensure the financial stability of theEU by repaying the debts accrued to fund the EU-wide post-pandemic recovery fund withthemoneyincurredfromdigitallevies; 5. Encourages the European Commissiontoadoptaprogressivedigitaltaxinorderto ensureequitybetweenSMEsandlargedigitalcompanies;

2 OrganisationforEconomicCo-operationandDevelopment(OECD)isaninternationaleconomic organisationwith37members,focusingonstimulatingeconomicprogressandworldtrade. 3 Digitallevyisadigitaltax. 4 Athirdcountryisanynon-EU/EEAnation.

Internationalcooperation

6. Urges Member States to collect feedback on digital taxation through fruitful conversation with non-governmental organisations, businesses of any type and generalpublic; 7. Requests Member StatestofurthercooperatewiththeOECDin preventingthelack ofcoordinationbetweendifferentfiscalsystemsandeconomicorganisations; 8. Encourages Member States to facilitate liaison offices’ communication with the

OECD on implementing the EU tax proposals in line with the OECD recommendations; 9. Encourages the EU to facilitate international dialogue with the United States of

Americaontheimplementationofdigitaltax.