The European Association of Cooperative Banks (EACB) gladly takes the opportunity to comment on the OECD consultation about for the Unified approach under Pillar 1 on how to tax Digital Economy.
The EACB welcomes the OECD's proposal of a Unified approach by combining individual components from the previous considerations under Pillar 1. While, the EACB recognises the difficulty to build compromises, it believes that the Unified approach leads to a very complex system in which many calculations steps have to be carried out by internationally active companies in order to determine their tax obligation. Moreover, the EACB expresses its concerns that there will be numerous delimitation difficulties and double or multiple taxation will probably occur.
In view of these difficulties (nexus, overtaxation), companies may be forced to establish a physical presence in order to avoid the new system. This can be especially the case in those countries where a nexus is only created via the Unified approach. As a result, EACB fears that the new approach can produce excessive unnecessary regulations to establish a foreign permanent presence.
Finally, EACB believes that several companies might choose offering their worldwide services only to a reduced group of users, which would be detrimental to the politically desired digitalisation and market freedom as a whole.