France said it would introduce its own tax for big technology companies from January 1, after most efforts at EU level were failed.
Nevertheless, the tax will be introduced on 1 January and will be for the whole of 2019. According to Finance Minister Bruno Le Mayer, the new levy is expected to bring about 500m euros in the Treasury next year. In addition to taxing direct sales, France will require companies to pay a levy on ad revenue, websites and resale of personal data.
France, along with Germany, urged the European Commission to adopt similar measures for GAFA legislation, named precisely after the first letters of Google, Apple, Facebook and Amazon, by the end of this year. However, the idea met with resistance from countries like Ireland, the Czech Republic, Sweden and Finland.
Earlier this year, the European Commission has published a proposal for a 3% profit tax on large internet companies with a global revenue of more than € 750 million a year, with at least 50 million of them being generated within the EU. The measure would affect companies such as Google, Apple, Facebook and Amazon as well as other leading digital services such as Netflix and Spotify. Critics fear that a possible European tax may be in violation of international rules on equal treatment of companies around the world.
EU tax reforms need to be approved by all Member States to come into force. Earlier this year, Britain announced it plans to introduce a tax on digital services in April 2020 after consultations.
European Commissioner for Economic and Monetary Affairs Pierre Moscovici said the proposal for a pan-European tax for technology giants “is still at the table” for negotiations.
The Organization for Economic Cooperation and Development (OECD), a group of leading global economies, is also working on proposals for an international scheme to regulate the taxation of technology companies. Several countries, including the UK, said they intended to impose new taxes on technology companies, as they are aware of the public displeasure of their often feeble contribution to the economies of which they are earning money.
These plans act as a response to often complex corporate structures created by several companies that draw huge revenue from major European markets but allow them to cut their tax bills by transferring their profits to low-tax jurisdictions.
Progress in both the OECD and the French-German proposals is slow, which has led France to move forward unilaterally.
