US companies blast Polish digital services tax plan

U.S. companies criticized a plan by Poland's Digital Affairs Ministry to implement a digital services tax, saying it would unfairly target some of the country's biggest foreign investors.

The draft legislation, whose public consultation period begins on Monday, seeks to introduce a levy of up to 3% on digital platforms that sell advertising, process user data or enable online sales. 

Donald Trump's administration has threatened retaliation against European Union efforts to tax American tech companies, with the row growing into another trans-Atlantic flashpoint after a standoff on trade as well as Greenland. The tax plan comes at a sensitive moment for Poland, a close U.S. ally that relies on Washington's security guarantees amid Russian aggression in eastern Europe. 

"This proposal ignores years of positive impact of U.S. investors on the Polish economy, signaling a retreat from the trusted relationship that has seen American firms allocate $60 billion in assets in Poland," Marta Pawlak, director for legal and public policy at lobby group the American Chamber of Commerce in Poland, said in a statement to Bloomberg. "This policy sends an alarming signal to American investors across all sectors."

German Finance Minister Lars Klingbeil called for tougher action against U.S. digital platforms during a visit in Warsaw on Monday, arguing that these companies undermine democracy and harm European consumers.

"We must rein in the power of the American platforms," said Klingbeil. "We see monopolistic structures emerging that are not good for democratic discourse and not good for consumer protection."

Poland's Finance Minister Andrzej Domanski said he discussed "various possible options at both the EU and national levels" with his German counterpart, adding that no decision has yet been taken in Poland.

Not discriminatory

According to an analysis by the Digital Affairs Ministry, the levy would primarily affect Chinese e-commerce platforms, which have rapidly expanded sales in Poland. This has raised concerns over the firms' reporting of local revenues and paying domestic taxes. 

"The tax does not discriminate against any company because it applies to every entity that meets the conditions for taxation, regardless of origin," the Digital Affairs Ministry said by email. 

The tax would apply to firms with global revenues above €1 billion ($1.1 billion) and at least 25 million zloty ($7 million) in revenues reported in Poland. The proposal allows firms that pay corporate income tax in Poland to offset the new levy against other liabilities.

The draft requires approval from the government, which could send the draft to parliament for further work, amend it or scrap it altogether. Last year, Prime Minister Donald Tusk said a decision to introduce the tax must be weighed against the need of maintaining good cooperation with the U.S. and American companies. 

Alphabet Inc.'s Google, which employs more than 3,000 people in Poland, said digital taxes are harmful and discourage foreign investment. "We pay all required taxes in Poland and have long supported reform of the international tax system, which in our view is the best way to fairly tax the digital economy," the company said in a statement. 

U.S.-based online travel company Booking Holdings Inc. urged the government to work toward a multilateral solution with the help of the OECD, a club of the world's richest countries including Poland.

"Digital services taxes harm innovation and local economies and can result in double, triple and sometimes quadruple taxation for EU-based online platforms like Booking.com — already one of the largest corporate taxpayers in Europe," the firm said.