The European Commission published its proposal for a digital tax last month. The Commission’s proposals follow the publication of OECD’s report on how it plans to deal with tax challenges of the digital economy at an international level.

The Commission has put forward two legislative proposals:

• The first initiative aims to reform corporate tax rules in the long term so that profits are registered and taxed where businesses have significant interaction with users through digital channels.
• The second proposal is the introduction of a 3 percent interim tax on turnover to cover the main digital activities that escape tax altogether in the EU according to the Commission.

The legislative proposals were submitted to the European Council for consideration. While the European Council held a meeting on the 22 and 23 March, there was scant detail provided in the Council’s press release on the Commission’s proposals. Commenting further on discussions at the Council meeting, President of the European Council, Donald Tusk said that the topic of a digital tax will be considered again at the Council’s next meeting in June.