Tech giants raise their voices against the IDSD tax or 'Google Tax’

August 10, 2023 by
Frank Calviño

Spotify, Booking, Glovo, and fifteen other tech companies address a letter to European finance ministers expressing their dissatisfaction with the IDSD, stating that it is a "disproportionate impact" and that the system creates inequality of conditions.

According to estimates published in 2020 by the organization, the global tech tax would collect around $100 billion annually. The IDSD does not tax profits but rather gross revenues, applying it regardless of the company's profitability. The signed First Pillar aims to avoid double taxation, but the IDSD creates a multi-layered taxation system without compensation mechanisms with other taxes. Additionally, it is accounted for as a charge, affecting EBITDA operating income and the companies' accounting.

"These actions may include adverse and arbitrary taxes on the business volume or local operations of foreign companies in those countries, further impacting companies' ability to grow and compete on an equal footing," the companies add in their letter.

IDSD can 'create trade tensions and impact customers'

The companies argue that the IDSD can lead to trade tensions, retaliatory measures from other countries, and impact customers. 

Spotify, Booking, Glovo, Eat, AirHelp, Allegro, Catawiki, Criteo, Delivery Hero, Schibsted, Trustpilot, Vinted, Wolt, and Zalando have also warned that all these contingencies can result in price increases for consumers to absorb better and make the tax impact more profitable.

Furthermore, they add that these taxes "risk proliferating," leading to increased detrimental effects on businesses. This would gain more strength without a consensus on the 'First Pillar,' currently under negotiation at the Organization for Economic Cooperation and Development (OECD) for future global tax reform. Under this pillar, activities of companies in countries where they generate profit would be taxed, even if they do not have a fiscal presence.

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