Introducing an EU-wide digital tax would be a “quick fix” that could leave Europeans significantly worse off, Finance Minister Edward Scicluna argued at an ECOFIN Council held in Brussels on Saturday.

“The impact on us could be serious and possibly ominous. This is because Europeans are mostly exporting countries and the significant loss in revenue would be enormous if we were to switch corporate taxation on consumers,” Prof. Scicluna told counterparts during the Council session.

EU member states have for the past year-and-a-half been discussing how to get internet giants such as Facebook, Google and Amazon to pay their fair share of taxes.

The European Commission and European Parliament are both largely in favour of introducing a so-called digital tax, and earlier this year the Commission proposed an EU-wide 3 per cent levy on online advertising, e-commerce and other online intermediary activities and selling data.

Those plans – which must be unanimously approved by member states - are however opposed by a minority group of member states, including Ireland, Sweden and Denmark. Last March, Prof. Scicluna had expressed reservations about the plans, saying introducing such a tax only made sense if it was introduced across the globe, not unilaterally.

On Saturday, Prof. Scicluna told ECOFIN ministers that Malta fully supports the setting up of a working group to examine the various impacts on EU member states of the various tax proposals being put to the OECD, as a result of the increasing digitisation of the economy.

Prof. Scicluna also made the case for Maltese wine producers to be allowed a lower excise tax on wines.

Malta sceptical about BICC plans

The Finance Minister participated also in the Eurogroup meeting which was convened on Thursday. The Eurogroup meeting focused primarily on the Budgetary Instrument for Convergence and Competitiveness (BICC) which forms part of the ongoing discussion on the deepening of the Economic and Monetary Union, through the setting up of a Eurozone budget. The discussion on the BICC centred on the revenue aspects as well as the overall features this instrument should contain.

During the meeting, Minister Scicluna said that Malta would oppose the instrument if financing it would impact national tax sovereignty. Minister Scicluna added that the allocation criteria to be used for the instrument should not discriminate disproportionately amongst member states and should not be based exclusively on population. Minister Scicluna argued that member states which have converged in the past, but are experiencing an element of divergence, should also be given preference.

Discussions on this instrument are expected to continue with the aim of reaching an agreement in June.

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