See What the EU's new taxes on the tech giants mean - and how they would hurt Ireland
The recent UK budget included a 2% tax on these online revenues which would take effect in 2020 barring an international agreement on such taxes. The target of the tax is the big US multinationals. If it proceeds,this tax would cause trade tensions with the Trump administration.
Online ad revenues of US tech giants Facebook and Google are akin to exports from the US. The online services they provide attract large viewing audiences,generating huge ad revenues.
Similarly, US movie and TV studios export their programming products to EU cinema and television operations and get paid in cash instead of advertising. Those exports are not taxed in the EU if the seller doesn't have a physical presence in the EU. Technically, a physical presence isn't absolutely necessary but a lack of presence would hamper effective marketing. Where a physical presence exists, an EU tax on the profit from the value added by the presence is reasonable. That would be a complicated tax calculation.
An obvious multinational example of where value is created is provided by the pharmaceutical industry. Given the heavy R&D on new drugs, usually in hundreds of millions,pharma companies are justly entitled to be taxed largely in the country where the R&D occurs. An EU 3% tax on sales would be very damaging to the industry.
From a EU tax standpoint, should a distinction be made between profits from a Facebook fan using US software, a person watching a US movie in a cinema and a person on US pharma drugs?