U.S. Tech Companies Finds A Way To Pass On Their Digital Services Tax

Earlier, big tech American companies such as Apple, Google, Facebook, and Microsoft, among others have been accused of paying very fewer taxes in the European region. Therefore, to avoid such conflict between Europe and U.S. tech firms, some European countries have levied digital services tax.

These U.S. tech companies responded with passing their taxes to the users. Last month, Apple, Google, and Amazon announced the changes in the price for their digital assets. Recently, the UK government has rolled out a new “digital services tax” on the revenue produced by search engines, social media services, and e-commerce marketplace. The government has increased taxes by 2% on the revenue.

 Apple announced that it increases its fees charged to app developers in the coming days. Meanwhile, most of them believe these changes are due to the digital taxes but this trillion-dollar company says that its fees adjustments are due to changes in VAT (value-added tax). “When taxes or foreign exchange rate change, we sometimes need to update prices on the App Store,” Apple said in a statement.

A few days ago, Google also released information on the new fees for the ads in some countries. The company said in a statement that “As of November 1, 2020, a 2% UK DST (digital services tax) fee will be added to your next invoice or statement for ads served in the United Kingdom. The fee is driven by the new digital services tax in that country.” This tax would be borne by the consumers and “we will be adding a fee to our invoice,” a Google spokesperson told The Guardian.

 Amazon also announced the upcoming fees following the introduction of digital services tax by the UK government. The company said that the third-party sellers will be charged 2% more on the fees starting from September 1, 2020. “Like many others, we have encouraged the government to pursue a global agreement on the taxation of the digital economy at OECD level rather than unilateral taxes, so that the rules would be consistent across countries and clearer and fairer for businesses,” Amazon spokesperson told Business Insider.

The DST is just not levied in the UK but some European countries including Turkey, Italy, UK, France, and Italy have also introduced their taxes. This, in turn, has ultimately increased the burden on app developers and consumers. For instance, in turkey, Apple has increased its App store prices by 7.5% owing to the country’s DST. Meanwhile, it has increased the prices by 25% for the U.K. citizens.

In January 2020, Italy’s Finance Minister Roberto Gualtieri told CBNC that the country is seeking global solutions but “if there will not be a solution at a global level, we will go ahead.” While the U.S. government said that the country would retaliate against this discriminatory and unfair taxes. President Trump said that “if people want to just arbitrarily put taxes on our digital companies, we will consider arbitrarily put taxes on car companies.” In 2018.  Trump’s government had already threatened Europe’s auto industry in 2018. He said that he would be levying a 25% import tariff on each car imported from the European Union (EU).