After a general decline in tech stocks shook the markets early this week, a new threat has some of the heavy hitters quaking in their boots. Reuters reports:
The European Union’s plans to increase taxes on digital firms risks undermining the bloc’s growth and stifle global efforts to find common solutions, U.S. companies operating in the EU said on Tuesday. Critics say online firms such as Google (GOOGL.O) or Facebook (FB.O) pay too little tax in the EU by rerouting most their profits to low-rate countries like Luxembourg or Ireland.
The news comes at a pivotal time. Facebook has been under pressure from both Congress and a failed stock reclassification that has pushed it stock back in recent days. Alphabet has also had its fair share of difficulties, losing some $60 in the past three months.
Current rules exempt loss-making firms from paying taxes. A report by EU lawmaker Paul Tang said the U.S. online retailer Amazon (AMZN.O), which has its EU tax residence in Luxembourg, has been mostly exempted from taxes in the 2013-2015 period because it did not make profits.
Markets would be affected greatly by any new taxation on the tech sector, which has been one of the driving factors of the bull market. Be sure to check your portfolio and react accordingly should this be taken any further.
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