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Abu Dhabi, UAEFriday 22 March 2019

France determined to bring in tax on tech giants

Levy of up to 5 per cent of French sales would be retroactive from January 1 and could raise about €500m

French Finance Minister Bruno Le Maire is pushing ahead with plan to tax major technology companes. AFP
French Finance Minister Bruno Le Maire is pushing ahead with plan to tax major technology companes. AFP

France intends to tax the revenue of about 30 internet giants such as Amazon to help ensure “fiscal justice”, according to Finance Minister Bruno Le Maire.

The levy of as much as 5 per cent of French sales would be retroactive from January 1 and will potentially raise about €500 million (Dh2.08 billion) for the state, Mr Le Maire told Le Parisien newspaper. Under the plan, which the cabinet will discuss on Wednesday, the tax will apply to any company with global revenue of more than €750m and French sales above €25m, Mr Le Maire said.

US, Chinese and European companies may meet the levy criteria, including a few French businesses, the report said, as governments grapple with how to tax global Internet companies that can generate huge domestic revenues from limited physical assets. Spain and the UK are also working on digital sales taxes, while Europe has so far baulked at a continent-wide levy.

France intends to tax revenues from local targeted ads, marketplaces and the re-selling of personal data.

Mr Le Maire said there was no risk of the new measure clashing with a tax agreement between France and the US. He discussed the plan with Steven Mnuchin during the US Treasury Secretary’s stop in Paris in February, according to Bloomberg.

The Organisation for Economic Co-operation & Development could eventually draw-up a political accord on digital and data taxation, Mr Le Maire said.

Le Parisienne's report comes after Mr Le Maire last week said some 127 countries and territories agreed in January to tackle some of the most disputed issues of international taxation, such as where digital companies' cross-border income should be taxed.

France has spearheaded efforts at the European Union and on the international level to change rules that currently enable companies such as Facebook and Google to reduce their tax bills by booking revenue in low-tax countries like Ireland.

The OECD is working on a draft deal, which it officially aims to have ready in 2020, most likely for a summit of the G20 economic powers towards the end of the year.

Mr Le Maire said that for the first time both the US and Ireland had expressed support for an OECD deal on taxation of digital companies in talks with his counterparts from the two countries in the past two days, reported Reuters.

"Two years ago nobody wanted to tax the digital firms, it was us the French who put the subject on the table out of concern for fiscal fairness, justice and efficiency," Mr Le Maire told Public Senat television.

He said EU countries were unlikely to agree to create an EU tax on digital companies at the next meeting of the bloc's finance ministers. But he was optimistic that progress on the OECD level could be made within the year.

"I think we can reach a new deal and a common European position at the OECD," Mr Le Maire said.

"With the European Commission position, and the support of the United States, we can get a digital tax proposed at the international level, at the OECD, by the end of 2019," he said.

Updated: March 3, 2019 10:47 PM

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