What can we expect of an EU digital tax in 2021?

We don’t know what the European Commission will come up with because there is big disagreement within the union. There are member states very much in favour of moving fast, others prefer to leave it to the OECD and have more global consensus. Whatever proposal the European Commission adopts, it would have to receive unanimous approval and that doesn’t make it any easier.

What are the chances of an OECD deal happening?

There is still a long way to go. The proposals are quite detailed and complex to follow. At the same time, they are very general, and crucial elements are missing, for example, what types of businesses would even be affected by such a new tax. The OECD is in a race trying to prevent national digital services taxes from popping up, like in France. Companies aren’t in favour of unilateral measures because they face a higher administrative burden. At the same time, countries fear retaliation--such as tariffs--from their partners if they introduce something on their own.

Could the pandemic speed up the process?

Digital taxation is not at the top of the priority list when you’re dealing with saving lives. At the same time, there is a higher need for revenue. The question is how much revenue a digital tax will generate, and the estimate is: not very much. But until the proposal is more concrete, it will be difficult to predict. There are too many variables right now to make a clear statement on how a country, like Luxembourg, would be affected.

This article originally appeared in the 2021 Forecast edition of Delano released on 16 December.