France to levy digital services tax on big tech companies like Google, Apple, Facebook, Amazon in the new year

At a press conference yesterday, French Economy Minister Bruno Le Maire announced that France would levy a new tax on big tech companies including Google, Apple, Facebook, and Amazon, also known as GAFA, w.e.f. January 1, 2019. This tax is estimated to bring in €500m, or about $567 million in the coming year.

Le Maire told France24 television, “I am giving myself until March to reach a deal on a European tax on the digital giants. If the European states do not take their responsibilities on taxing the GAFA, we will do it at a national level in 2019.”

In an interview with Reuters and a small group of European newspapers, Le Maire said, “We want a fair taxation of digital giants that creates value in Europe in 2019”. France, along with Germany’s help had proposed a comprehensive digital services tax (DST) to cover all 28 EU member states. However, Ireland dismissed the move stating that this would aggravate the US-EU trade intentions. Dublin also said this bloc should happen only after the Organisation for Economic Co-operation and Development (OECD) had presented its tax proposals in 2019. Le Maire, however, said that France would press ahead alone with the tax.

In March 2018, the European Commission published a proposal for a 3% tax on tech giants with global revenues north of €750m ($850 million USD) per year, and EU revenue above €50m (about $57 million). But with disagreements by some member states, including Ireland and the Netherlands, on how to move forward with such a tax, the process has been stalled.

Per Le Maire, “The digital giants are the ones who have the money." The companies "make considerable profits thanks to French consumers, thanks to the French market, and they pay 14 percentage points of tax less than other businesses.”

In October, British Chancellor Philip Hammond announced in the Budget that he plans to introduce a digital services tax from April 2020 following a consultation. The Chancellor's office has suggested that the tax would generate at least 400 million pounds ($505 million) per year.

According to Reuters, “President Emmanuel Macron’s government has proposed taxing the tech giants on revenues rather than profits, to get around the problem that the companies shift the profits from where they are earned to low tax jurisdictions.”

France and Germany in their alternative plan at a meeting of EU finance ministers proposed levying a 3 percent tax on digital advertising from Google and Facebook, which together account for about 75 percent of digital advertising, starting in 2021.
Ministers asked the European Commission to work on the new proposal and present its findings to them in January or February.
After the meeting, Le Maire said, "It's a first step in the right direction, which in the coming months should make the taxation of digital giants a possibility."

To know more about this in detail, visit France24’s complete coverage.