Eight Foreign Governments of the world’s sixteen largest technology companies are American, and they derive a significant amount of their revenue from overseas markets.

The companies that sell digital services outside of the US are currently taxed on profits, but not initial revenues. Some countries are now seeking to change this, with new forms of digital taxation being considered by governments in Asia and throughout Europe.

Europe Leading the Movement for Tech Taxes

An increasing number of tech companies offer services internationally, but the units sold often originate from a single country (sometimes outside of jurisdiction), which means that most of the revenue is not taxed.

France’s finance minister, Bruno Le Maire, is leading a campaign in Europe in the hope that he will gain support in the EU parliament. Le Maire said that “it is a question of fairness,” and stated that all “countries across the planet now understand they must impose a digital tax.”

Le Maire may have difficulty promoting this idea in Europe. There is resistance from powerful lobbying groups who say that additional taxes would cause companies to pay twice on their earnings. The Information Technology Industry Council said last week that any form of additional taxation for digital sales would be a “significant threat to companies in all sectors.”

Critics of suggested digital taxation laws have also stated that small businesses would be hurt the most, allowing the largest and wealthiest tech companies to further strengthen their leading positions.

The United Kingdom Could Implement a Digital Tax Independently

With Brexit progressing, the UK will soon be independent of the EU. Philip Hammond, the Chancellor of the Exchequer (Treasury), said in a recent statement that the UK could “go it alone with a digital services tax.”

Taxes levied on digital sales could bring $5.7 billion into Europe each year. This figure would only increase as digital services become more common. Malaysia is also considering digital taxes, with their Finance Minister recently telling the media that “if we put this matter aside, I think the nation will be losing revenue.”

Should tech companies pay more taxes on the sales they generate in overseas markets, or, is this simply a way for foreign governments to claim additional revenue from multinational firms?