Czech Republic to Impose 7% Tax on Global Internet Giants

The Czech government has approved a plan to adopt a tax on internet giants like Google, Amazon, Facebook and Apple.

Joining France and some other countries, the measure would impose a 7% annual tax on companies’ digital business revenues in the Czech Republic. It would apply to companies with global sales worth more than 750 million euros and Czech revenue exceeding 100 million Czech crowns.

The proposed tax covers revenue gained from targeted advertising, providing digital market places, and user data sales.

The finance ministry has estimated the tax could bring in some 5 billion crowns ($216 million) a year, starting in 2020.

“Internet giants do not pay taxes in our country to an extent that would match their profits, which is unfair to other companies in the Czech Republic that pay taxes,” said Finance Minister Alena Schillerová. “We have long supported the search for a common international solution, but unfortunately negotiations at EU and OECD levels will take some time. And because we can no longer wait and see the unequal competition of global giants with other entrepreneurs, we come up with our own temporary digital tax adjustment until an international compromise will be found.”

The Czech Republic is following the example of Austria, which introduced a five per cent digital tax to come into force by 2020, and France, whose national assembly has approved a three per cent digital tax.

The OECD is conducting multilateral discussions over how to tax international technology companies. The US said it would continue those discussions while conducting its own examination.