• by Sean Hargrave , Staff Writer, November 7, 2018

The tech giants have little to fear. EU rhetoric has a habit of sounding a lot more bombastic than the laws it leads to. There's a German phrase that sums it up -- you never eat as hot as you cook.

That was always the risk in the UK going it alone, or least saying it will go it alone on Digital Services Tax. The UK has gone for a 2% levy on tech giants with revenues over GBP500m per year. The EU has actually been debating a 3% charge, but of course, it needs all 28 member states to agree to it.

This is why the EU can never achieve much, and certainly not at speed. It is arguable that it is countries within the trading that who have been leading the calls for the tech giants to be taxed directly, so long as they keep insisting on legally avoiding what many would see as their full and fair share of tax. France, in particular, has been a leading voice.

However, when it comes to a room full of countries all agreeing, you can forget it. The Guardian points out that it is no surprise to hear Ireland is opposed. It is home to HQs from the likes of Apple, which got such a sweetheart deal on tax that the EU insisted it paid Ireland €13bn back and that Ireland, against its will, was made to ask the tech giant to pay up.

Ireland didn't want to rock the boat. It's very happy on the edge of Europe with a low corporation tax rate soaking up and taxing revenue that has been earned in the larger EU economies with tax rates around the EU average.

Ireland would always be against a sales tax. It's not the country where most of the trade is done. It could only stand to lose out on the attractive deals it can offer the tech giants.

However, when you have a country like Denmark raising objections and several others raising concerns about US retaliation you see the full scale of the problem in getting action out of the EU. Those who lose out from revenue earned in their big markets being taxed elsewhere are all for action. Those not in this category cannot be bothered to pick a fight with the tech giants and risk the ire of the US.

So yesterday the EU decided to kick the issue into the long grass and wait to hear what the OECD has to say. It has been saying for years that countries have to agree internationally and will doubtless look at the issue again only to announce that countries have to work in unison. And so the merry go round will take another turn without any action.

When the UK leaves the EU, it will have every right to charge the tech giants the equivalent of a 2% sales tax, and it should move forward with plans to stop multinationals from using nimble accountancy practices to legally avoid having revenue earned in the UK being taxed fully in the UK.

There is fear of contagion, however, the concern that the UK's bold solo action will bring about a concerted effort from the EU to follow suit. That simply isn't going to happen. The big markets would follow the UK's lead if they were allowed to, but they are held back by all 28 countries having to agree. If you've ever had to get a meeting to agree on tea or coffee and ham or cheese sandwiches, you know how difficult getting a group decision can be, particularly on something as huge as how to tackle the tech giants. 

The tech giants can rest easy. The UK is going it alone. The chance of the EU moving at speed is next to none.