July 16, 2019 / 3:10 PM / 2 months ago

Von der Leyen takes aim at U.S. tech giants' low tax bill in Europe

Designated European Commission President Ursula von der Leyen delivers a speech during a debate on her election at the European Parliament in Strasbourg, France, July 16, 2019. REUTERS/Vincent Kessler

STRASBOURG (Reuters) - Germany’s Ursula von der Leyen, seeking to become the first female head of the European Commission, has said she wants U.S. tech giants to pay “fair taxes” in the EU instead of gaming the different systems across the bloc to cut their bills.

If she should win the European Parliament’s backing for the job, and implement the policy, it could further strain ties between the European Union and the United States, already troubled by differences over trade, antitrust and politics.

“I will stand for fair taxes – whether for brick and mortar industries or digital businesses. When the tech giants are making huge profits in Europe, this is fine because we are an open market and we like competition,” von der Leyen told the parliament on Tuesday before a confirmation vote at 1600 GMT.

“But if they are making these profits by benefiting from our education system, our skilled workers, our infrastructure and our social security ... it is not acceptable that they make profits, but they are barely paying any taxes because they play our tax system. If they want to benefit, they have to share the burden.”

The move could hit companies such as Google and Facebook.

European Competition Commissioner Margrethe Vestager kicked off the quest for fairer taxes nearly five years ago by ordering Luxembourg, Ireland, the Netherlands, France, Britain and Belgium to recover back taxes from companies ranging from Apple to Starbucks and ENGIE because of illegal sweetheart deals.

France has taken the fight further and last week gave final approval to a 3% tax on the revenue of big technology firms that provide digital services in France.

That prompted President Donald Trump to order an investigation into the tax, which could lead to the United States imposing new tariffs or other trade restrictions.

Austria, Britain, Spain and Italy have also announced plans for their own digital taxes.

Reporting by Foo Yun Chee; Editing by Kevin Liffey

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