France creates new 3 percent tax for internet giants

France wants to lead the way in making internet giants pay taxes on digital sales where they take place

France wants to lead the way in making internet giants pay taxes on digital sales where they take place

The EU has so far been unable to agree a union-wide tax due to concerns from lower-tax countries, such as Ireland, where many of these digital companies now benefit.

In one of the most best known cases, the European Commission concluded that Apple had paid an effective corporate tax rate of just 0.005 percent on its European profits in 2014 - equivalent to just 50 euros for every million. It will be imposed on any company which has a global revenue of more than 700 million euros and which generates more than 25 million euros in the country itself.

About 30 companies will be affected, most of which are based in the U.S. (just one, Criteo, is based in France).

Le Maire said he would now push for an global deal by the end of the year among the countries of the Organization for Economic Cooperation and Development, a Paris-based forum made up mostly of developed nations.

Other firms that will have to pay the tax revenue include Uber, Airbnb, Booking.com and French online advertising specialist, Criteo.

Last month, the French finance minister said, the European Union could reach an agreement on details of a digital tax by the end of March.

For Le Maire, taxing GAFAs "is a question of fiscal justice" as "digital giants pay 14 percent less tax than small- and medium-sized European companies".

Under EU law, internet giants can choose to report their income in any member state, prompting them to choose low-tax nations such as Ireland, the Netherlands or Luxembourg.

Left-wing politicians denounced the measure as too feeble.

Germany is concerned that agreeing to the tax could affect auto exports to the United States.

Britain, Spain and Italy are also working on national versions of a digital tax, while Japan, Singapore and India are planning schemes of their own. In October, UK Chancellor Philip Hammond said the UK would tax 2% of British user-generated revenue in a new "Digital Services tax".

A spokesman for Facebook told AFP that, as of previous year, all advertising revenues generated from French clients were now registered as French income.

Dubbed the GAFA tax, which is an acronym of the USA companies it targets: Google, Apple, Facebook and Amazon, the proposed levy will impose a 3% revenue tax on digital companies with global revenues above €750 million and above €25 million in France.

Raphael Pradeau from the anti-globalisation Attac lobby group said the proposed French tax is "symbolic and does not solve the problem of massive fiscal evasion".

Recommended News

We are pleased to provide this opportunity to share information, experiences and observations about what's in the news.
Some of the comments may be reprinted elsewhere in the site or in the newspaper.
Thank you for taking the time to offer your thoughts.