A revenue tax would mark a shift away from the current standard of taxing corporate profits.
The European Commission wants to tax digital giants on their revenue at a rate between 1 and 5 percent, according to a draft report seen by Reuters.
The proposal would apply to firms such as Google and Facebook which have more than €750 million of revenue worldwide and EU digital revenues of at least €10 million per year, according to the report.
A revenue tax would mark a radical shift away from the current standard of taxing corporate profits. Under the proposal, taxes would be levied in the place where online advertisement is displayed.
The Commission’s draft proposal, which is subject to change before its publication in March, follows criticism from EU governments that U.S.-based tech giants are not paying enough into national coffers. A French led-plan to tax digital giants on their revenues won support from a majority of European states last year, but lost momentum due to opposition from low-tax countries including Ireland and Luxembourg.