You're listening to the European Parliamentary Research Service podcast on digital corporate taxation.

The European Commission has proposed new rules to ensure that large companies, including digital giants such as Google, Facebook or Amazon, pay fair tax in the EU.

But the new measures could face an uphill struggle, as some member states we prefer to see

the issue dealt with at international rather than at European level.

Want to know more? Stay with us.

In an ever interconnected world, digital activities bring money. Lots of money.

Yes, they do. Digital companies have much higher annual growth rates than traditional bricks and mortar companies, 14% on average,

compared to 0.2% for other multinationals. And their presence is growing. In 2006, only one digital

company was among the top 20 global companies, accounting for a 7% market share.

Today, nine digital technology companies are in the top 20, accounting for a far more significant 54% market share.

But there's a problem, as this flourishing digital economy is substantially under taxed when compared to more traditional companies.

So whereas traditional EU companies pay an average tax rate of over 23%, digital companies get away with less than 10%.

That's because current tax rules are based on the physical presence of taxpayers and assets

and were not designed to cater for those companies that may have little or no physical presence.

This, together with often generous incentives from governments that want to support the growth of this promising sector

and attract digital companies to their territory, means national tax authorities are losing out on significant revenues from digital giants.

So the challenge is to make the most of the digital revolution, while ensuring that digital

companies also contribute their fair share of tax.

Now, how is the Commission planning to do that?

Stay with us.

While as Member States are starting to seek fast, unilateral solutions to tax digital activities, creating

a legal minefield and tax uncertainty for business, the European Commission is convinced that

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