The role that tech companies play in society has gotten particular attention in recent days, amid revelations that a political data firm with ties to President Trump's 2016 campaign gained access to private information on tens of millions of Facebook users. It would only apply to large companies, however, with revenues that exceed 750 million euros worldwide and 50 million euros inside the EU.
The European Union on Wednesday unveiled new plans to make big tech companies pay more taxes in a move that would, if endorsed, hit online USA firms like Google and Facebook. All EU member states would have to approve the proposal before it could become law, and it's not entirely clear if countries like Luxembourg or Ireland, which benefit by serving as tax havens for USA companies, would want to see major tax reform that makes it harder for companies to hide their sales from taxation.
The Commission estimates that digital businesses pay an average effective tax rate of 9.5 percent, compared with 23.3 percent that traditional businesses pay.
Spared are smaller European start-ups that struggle to compete with them.
Facebook Chief Executive Officer Mark Zuckerberg has been urged to come answer questions by European Parliament head Antonio Tajani and Damian Collins, head of a United Kingdom parliament committee investigating the impact of social media on recent elections, over a "catastrophic failure of process".
The EU tax plan includes an interim measure which will target mainly US companies with worldwide annual turnover above 750 million euros ($924 million), such as Facebook, Google, Amazon, Twitter, Airbnb and Uber.
In the interim, though, Brussels will stick to the 3-percent tax based on revenues.
The initial, interim plan the European Union proposed, is to tax digital firm's revenue at a rate of 3%.
But others - including Ireland, Luxembourg, and Cyprus - have voiced their preference for a global solution through the Organization for Economic Cooperation and Development.
The EU's trade commissioner Cecilia Malmstroem is in Washington this week trying to get the bloc exempted.
The Trump administration does not support the proposed EC plan. "We need to urgently bring our tax rules into the 21st century by putting in place a new comprehensive and future-proof solution", said commission vice president Valdis Dombrovskis. They agreed to provide an update on the situation in 2019. Even if this proposal doesn't pass, it at least starts to put pressure on these companies going forward.
"There are divergent views on how the issue should be approached", the OECD said, adding there was no agreement on how to approach such taxes in either the short or long term.
German industry, meanwhile, has warned of negative consequences resulting from the tech tax proposal, with the Federation of German Industries (BDI) saying that there could be "collateral damage" to industrial companies as politicians seek to reap tax money from tech firms around the world.
The lobby group which represents around 700 USA companies operating from Ireland suggested that proposals, which are being discussed today at a meeting of the commission, should be agreed internationally through the OECD.