As global tech companies get to grips with the digital services tax, Guillermo Narvaez, technical director of the Kreston Global Tax Group, asks whether the cost of tax will be handed on to smaller businesses
The idea of a digital tax or digital services tax (DST) is to impose a tax on big tech companies when selling online advertising, charging fees for intermediating in commercial transactions or selling user data.
The idea seems straightforward – levy a tax burden on those who earn more – but who is actually going to pay for this tax? The reality is a little bit different given that the customers of digital services, not the tax subjects, are the ones who face the liability. Under this premise, where do the small and medium-sized enterprises (SMEs) stand?
Big tech multinational companies like Amazon, Google or Apple pass on the burden created by domestic digital services taxes to their customers, many of whom are SMEs. The European Centre for International Political Economy (ECIPE) determines that ‘the EU’s commercial landscape is characterised by an overall share of highly diverse SMEs which account for 99.8% of all EU enterprises and 66.6% of overall EU employment’.
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