Paris — The Organisation for Economic Co-operation and Development (OECD) says a proposal by leading European nations to tax the revenues of large US internet companies is at best an interim option until a global solution is found.
"A tax of revenue would be an interim solution," said Pascal Saint-Amans, director of the OECD’s Centre for Tax Policy and Administration during a hearing at the French parliament.
France, Germany, Italy and Spain have adopted a common position to explore options compatible with EU law to tax internet companies based on the revenues they generate in their countries.
Big EU countries have become increasingly frustrated that internet companies such as Amazon, Apple, Facebook and Google escape paying much in taxes by basing and often billing their operations through low-tax EU states such as Ireland.
Corporate taxes are based on profits, with each country setting its own rates, as well as the base on which the tax is calculated.
Generally speaking, "taxes on revenues, they’re daft" as they can result in loss-making firms being forced to pay, said Saint-Amans, citing the example of streaming film and TV platform Netflix, which is still posting losses as it expands and invests in producing content. "You are going to tax loss-making firms? That will cause problems unless there are mechanisms" to avoid doing so, he said.
Saint-Amans said he understood the motivation of the proposal’s backers.
"Politically, I understand that it may be necessary, because there is no clear perspective on an agreement within a reasonable time," he told French law makers.
French Finance Minister Bruno Le Maire complained last month that the OECD and European Commission were taking too much time to develop new methods to tax internet firms.
Several national authorities in the EU have opened up tax fights with Google and other large internet firms.
A French court ruled in July that Google was not liable for €1.12bn in taxes claimed by the state. France appealed the decision.