Malta to study French-German proposal to tax digital advertising sales

Malta will “objectively” evaluate a Franco-German proposal to tax digital advertising, after the two countries ditched EU plans to impose a wide-ranging digital tax on tech companies. 

Instead they will propose a narrow levy on advertising sales that would be likely to exclude giants like Amazon and Apple.  

Malta has not been a supporter of harmonised taxation measures on multinationals. “While we contend that the OECD is the appropriate institution where global tax matters should be discussed and agreed, we will still evaluate objectively the latest tax proposal by Germany and France on digital advertising by big international companies,” Maltese finance minister Edward Scicluna said. 

Finance Minister Scicluna with IMF Director of the European Department, Poul Thomsen

Scicluna met European counterparts in Brussels, where he underlined his country’s steadfast belief on unanimity in tax matters, a principle enshrined in the Treaties of the Union. 

The French and Germans have now presented a plan to now impose a 3% on revenues generated by ad sales in the digital economy, which is a compromise that abandons wider plans to target some tech giants on data sales. 

Under the new plan, Facebook and Google would be targeted through their sales of advertising but other retailers like Amazon, AirBnB and Spotify were likely to be excluded - diplomats told the Financial Times the focus on just advertising was “designed to alleviate German concerns that its car companies could be hit by the tax.” 

Nordic economies opposed Europe’s attempts to go it alone with new tax rules for digital companies, in favour of broader international rules. 

Tax matters need unanimous agreement from all EU governments but a Brussels blueprint on wider digital tax has run into fierce opposition from countries including Ireland, Finland, Denmark, Sweden and Luxembourg.    

ECOFIN also discussed the proposalunder the Banking Union Package, the proposals of which are aimed at reducing risks for banks such as the prevailing issue of non-performing loans. 

Scicluna said that reaching an agreement on the Banking Package was a key deliverable agreed upon in 2016, and should therefore unblock the path for further measures to strengthen the Banking Union. He thanked the Austrian Presidency for addressing a specific issue which Malta had as a result of its limited and illiquid market for subordinated liabilities. “The proposed solution in that respect gives the necessary consideration to the realties of smaller member states.” 

Scicluna also participated in the marathon Eurogroup meeting which approved draft budgetary plans of Eurogroup members, including the Maltese draft budget, which was deemed fully compliant with the rules of the Growth and Stability Pact.