The European Association of Cooperative Banks (EACB) gladly takes the opportunity to comment on EC roadmap consultation on the taxation of the digital economy following its comments on the OECD Pillar I and II consultations on the same issue.
The EACB welcomes the EC plans on the taxation of the digital Economy. This initiative aims to introduce a digital tax to address the issue of fair taxation of the digital economy. The EACB is a strong advocate of this approach.
In view of these circumstances, the EACB believes that the financial sector should be exempted by the new digital taxation. This should apply both to the investment banking business and at consumer-facing banking services.
This carve -out should be granted to the financial sector both for simplification and, in particular, for compliance cost reasons. The financial industry is one of the industries which has been hugely affected by new regulation and extra compliance costs in the recent years in order to reduce risks and safeguard financial stability. For this reason, political institutions have not expressed any concerns regarding the level of taxation of banks. As a result, there is no need to rectify any injustice in terms of profit sharing.
The main goal of the new digital tax is mainly to tax fair the activities of the Digital Companies (e.g. GAFA). It must also be taken into account that banks do not have such high profitability, especially in consumer and retail banking, as might be the case in the digital sector. This fact can be verified by simply applying the return on equity and return on assets standards. Moreover, institutional and investment banking should also be out of scope of the digital Tax since these services are provided in a business to business context.