U.N. Considering Global Internet Tax for U.S.-Based Websites

    June 8, 2012

Should some of the largest online content providers have to pay up in order to continue to reach the global market? The United Nations thinks so, according to some leaked documents obtained by WCITLeaks.org, and such a tax will be up for debate this December when the agency’s International Telecommunications Union convenes for the World Conference on International Telecommunications in Dubai.

The tax would have adverse effects on companies such as Google, Apple, and Facebook that have thrived off of their access to the rest of the world. Levying a tax on these companies so that they can continue to maintain a presence throughout the world has raised concern among industry observers about how the ITU’s internet tax would diminish the communication outlets around the world and hamper the openness of the internet, leaving developing countries in isolation.

On page 36, Section CWG/54/6.14 of the draft of the document dated June 6, 2012, the proposed regulation states, “Countries are free to levy fiscal taxes on international telecommunication services in accordance with their national laws.” Later, in CWG/54/6/6.16, the document continues:

National authorities are free to impose taxes on all telecommunications traffic, whether incoming or outgoing. However, such taxes should be reasonable and the proceeds should be directed where possible at the development of the industry. Regarding double taxation, Member States are encouraged to cooperate within the framework of bilateral, juridical double taxation treaties under which taxation arrangements are pre-determined by the terms of the treaty so as to protect against the risk of double taxation and avoidance or evasion of tax liability.

The two policy analysts behind WCITLeaks spoke to CNET about the dangers of the ITU’s proposed tax, suggesting that the attempt to tax U.S.-based internet companies is likely born of greedy ambitions but carries with it the collateral threat to free speech.

Eli Dourado, a research fellow who founded WCITLeaks along with Jerry Brito, told CNET this afternoon that the documents show that Internet taxes represent “an attractive revenue stream for many governments, but it probably is not in the interest of their people, since it would increase global isolation.”

Dourado hopes to continue posting internal ITU documents, and is asking for more submissions. “We hope that shedding some light on them will help people understand what’s at stake,” he says.

The tax proposal comes by way of the European Telecommunications Network Operators Association, a lobbyist group that represents several companies throughout different countries that would love to see a the tax proposal ratified.

Last week, Vint Cerf, one of the architects of the internet, testified before the U.S. Congress about his growing concern about the U.N.’s ambitions to regulate the internet and the organization’s vulnerability to the influences of countries that aren’t so much in favor of having an open internet, like China, Russia, India, and others. Deciding to tax companies that have championed the free exchange of information on the internet would be a covert yet decisive victory for those interests that wish to undermine web’s openness.