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Barroso Presses Plan to Raise More Tax From Digital Firms

Oct. 23 (Bloomberg) -- European Commission President Jose Barroso promoted his plan for squeezing more revenue from technology companies, foreshadowing a possible clash on the proposal at a summit beginning tomorrow.

Barroso wants Internet-based companies such as Amazon.com Inc. to contribute more to state coffers weakened by a sluggish European economy and the euro-area debt crisis.

“There are some specific challenges which are posed by new digital business models which existing tax policies may not fully address,” Barroso told the European Parliament in Strasbourg, France, today. “The commission is actively working on a series of measures to fight against tax evasion in general.”

The initiative threatens to spark fresh divisions among the European Union’s 28 national governments over the bloc’s role in tax policy. Taxation is one of the most politically charged and slow-moving areas of EU policy, requiring unanimous support among member nations for any common legislation.

A French-led group has questioned whether big companies such as Apple Inc. and Google Inc. avoid paying hundreds of millions of euros in taxes through loopholes created by differing fiscal regimes. Countries including Ireland have rejected any EU encroachment on their right to set tax rates.

The commission’s plan is “an opportunity to start and foster the debate on setting up a level playing field” Catherine Trautmann, a French member of the EU Parliament and a former culture minister for the country, said by e-mail.

At their Brussels meeting, EU leaders will consider taxes as part of a discussion on the digital economy. An Oct. 21 draft of the summit conclusions said “the ongoing work to tackle tax evasion, tax fraud, aggressive tax planning, tax-base erosion and profit shifting is also important for the digital economy.”

To contact the reporter on this story: Ian Wishart in Strasbourg, France at iwishart@bloomberg.net

To contact the editor responsible for this story: James Hertling at jhertling@bloomberg.net

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