Austria seeks to tax Google search

Austria is seeking ways to make digital services like Alphabet’s Google or Facebook pay taxes for transactions with the nation’s internet users, trying to plug gaps in a tax system still designed for brick-and-mortar business.

The most ambitious part of the plan targets the business models of Twitter, Google or Facebook: The tacit pact under which searching, liking, posting and tweeting remains free as long as users let the companies feed usage data into algorithms that help tailor advertising that can be aimed at the most likely buyers.

That arrangement is a form of bartering, and a value-added tax could be imposed on such transactions just as the levies are extended in other parts of the economy, said Andreas Schieder, the parliamentary head of Austrian Chancellor Christian Kern’s Social Democrats, which govern in a coalition with the conservative People’s Party.

“The business transaction that’s going on here is that users are paying with their personal data,” Schieder told journalists in Vienna. “The business model of those internet companies is based on massive revenues that are generated with the help of those data.”

Raising more taxes from digital businesses is part of a broader plan to amend the country’s corporate tax code. The package also includes closing loopholes that allow “aggressive tax planning” and corporate tax avoidance, which cost the Alpine country as much as 1.5 billion euro ($1.6 billion) a year, about a fifth of its annual corporate tax revenue, Schieder said.