An EU push to introduce new taxes for online multinationals goes against the essence of the single market and would leave Europe at a competitive disadvantage, Prime Minister Joseph Muscat told an EU Digital Summit today.
"If such a tax were to be introduced, it should become a worldwide rule, not a European one," Dr Muscat said from Tallinn, Estonia.
If that did not happen, he warned, multinationals would shun the EU and base themselves elsewhere. The EU would also have to find a way to stop multinationals not registered in the EU or paying the tax from selling their products and services within the continent, he added.
The EU would also have to find a way to stop multinationals not registered in the EU or not paying the digital tax from selling their products and services within the continent, he added.
Large EU member states are keen to crack down on multinationals such as Amazon and Facebook, who they accuse of paying too little tax in Europe by routing most of their profits to low-rate countries such as Ireland or Luxembourg.
A draft European Commission report published this week found that, on average, brick-and-mortar multinationals pay double the taxes of their digital competitors within the EU.
The report accepts that international consensus on taxing the digital economy would be preferable, but suggests the EU should forge ahead with its own arrangements if no global deal can be reached.
"We understand the argument being made by those pushing this proposal, but we do not agree with it," Dr Muscat told fellow EU leaders in Tallinn.
Europe should take the disruptive technology lead - Muscat
Dr Muscat said he was keen to see Europe lead the way in the adoption of disruptive technologies such as blockchain, and that he expected such a declaration of intent to form part of the EU Council presidency's final summit declaration.
He said Malta was hard at work to introduce new technologies which improved citizens' quality of life, and cited a new pilot project which combined an individual's various educational qualifications onto a central online register as a case in point.