EU leaders split on plans for a European digital tax

EU member states have failed to reach a consensus on imposing an EU-wide digital services tax, which affects firms such as Facebook and Alphabet, over fears of potential US retaliation.

The plan, which requires approval from all 28 EU member states, is opposed by many. The levy would see a three per cent tax placed on the revenue of large tech firms, many of which originate in the US.

"It is very difficult to see an agreement on the digital tax because so many technical issues are not solved yet," said Danish finance minister Kristian Jensen.

"Of course there will be a reaction from the US," he added, stipulating the measure was "not a good idea for Europe".

The UK and other countries, such as Spain and Italy, have already promised to implement their own version of the tax.

The news follows comments made by UK chancellor Philip Hammond last night, which defended the country's digital services tax international reach.

He said while the measure is a "subject for debate" between the UK and US, there are similarly extraterritorial efforts included the US tax reform act which are "arguably discriminatory against non US companies".

He also recognised that while the EU is struggling to reach consensus, "everyone recognises its a problem".

French finance minister Bruno Le Maire has been outspoken on the issue, and today said France would only hold off implementing its own digital services tax if a deal is reached between EU members by the end of this year.