The tax on certain digital services (IDSD) proposed by the Government of Spain will have a negative impact on the welfare of Spanish consumers. This damage, with an estimated economic value of between 515 and 665 million euros in the Gross Domestic Product (GDP), is derived from the increase in the price of products and services, which entails paying more for them (negatively impacting on savings). ) and even, in some cases, not being able to afford their acquisition and enjoyment.
This follows from the study 'Impact of a tax on digital services of the Spanish economy', prepared by PwC at the request of Ametic and Adigital, whose conclusions have been presented this morning in Madrid.
According to the report, the big losers of the so-called "Google Rate" will be precisely the main beneficiaries of digital services: small and medium enterprises (SMEs) and consumers. And, the foreseeable thing is that the cost of the tax will be transferred to the companies that use the taxed services, which will transfer a part to the final price paid by the consumer. Depending on the variation of the quantity demanded of products and services before a variation in the price, a part of the cost will be assumed by the consumers, through the price, and the rest the seller himself, as an increase in cost.
The report also estimates that Spanish companies that use digital services will see their benefits reduced between 450 million and 562 million euros, adding the increase in the cost of using platforms and online marketing and the decrease in sales due to the transfer of part of the price to the final customer.
This effect will have a negative economic impact of up to 662 million euros on the national GDP, according to PwC. Also, as a collateral result, the introduction of this tax it will have a negative net impact on the collection of VAT, due to the decrease in billing.
Long-term effects on the economy
In the long term, if the digitalization process of the companies slows down, the national economy will be at a competitive disadvantage compared to other countries.
According to PwC, an increase of 10% in the digitization index of a country supposes a growth of 0.75% in the GDP per capita and reduces a percentage point the unemployment rate. Lasting the digitization process with a digital tax will impede these potential benefits that digital technologies can provide to Spain in terms of productivity.
With everything, the "Google Rate" will have a distorting effect on the market, creating competitive advantages of certain companies over others. The tax will hurt the most digitized companies that use third-party platforms to sell or advertise their products -Mainly SMEs, for the lowest cost-. These SMEs will be affected, on the one hand, by exporting, since they will pay at least half of the tax, functioning as an export tariff. On the other hand, in the domestic market they will pay the full tax, being at a competitive disadvantage with respect to foreign importers, who would pay only half, thus encouraging importation.
Importance of digital services for SMEs and consumers
The online platforms for exchanging products and services (marketplaces), either between companies (B2B) or companies to final consumers (B2C), are one of the activities that will be affected by this tax. It is an affordable solution for smaller, recently-created companies or startups to make online sales of their products without having to develop their own platform. Proof of this is that half of the sales of Spanish companies through these digital platforms correspond to small companies.
Likewise, the marketplaces facilitate the internationalization of SMEs, allowing to expand their market outside the national territory. The IDSD will also affect intermediation platforms for the exchange of goods or services between individuals (P2P), the sale of user data and online advertising platforms.
For María Teresa Gómez Condado, general director of Ametic, "the tax on certain digital services supposes a penalty to the digital industry, the first sector that generates growth and employment. In addition, the approach of the tax, by taxing income and not profits, contradicts the traditional international principle of taxing corporate profits and can lead to situations of double taxation. However, in order to carry out a proper control of digital revenues, global and coordinated measures are needed within the OECD to avoid distorting effects on the market and benefited and disadvantaged countries ".
On the other hand, José Luis Zimmermann, CEO of Adigital, has agreed on the need for an accepted and agreed regulation on a global scale: "The aim is to achieve a modern and adequate regulatory framework that incorporates the international principles that have enabled innovation up to now. Spain can not adopt unilateral measures that leave us in a situation of exceptionality, and therefore of disadvantage, in the international political and economic context. "