France unveils new tax for global internet giants including Facebook and Google

Roman Schwartz
March 8, 2019

France on Wednesday introduced a bill to tax internet and technology giants such as Google and Facebook on their digital sales, putting it among a vanguard of countries seeking to force the companies to pay more in the markets where they operate.

That effectively means the companies pay little tax in countries where they have large operations.

Only digital companies with global annual sales of more than 750 million euros and sales in France of at least 25 million euros will be taxed under the new French law.

"The tax on the digital giants is a strong measure, expected by the French people, which aims to restore fiscal justice and build the tax policy of the 21st century", said Bruno Le Maire, the French economy minister, on Wednesday morning, before entering discussions with the rest of the cabinet about the proposal, which is then expected to be presented to the French parliament.

Le Maire said in Le Parisien newspaper Sunday that about 30 companies, mostly based from the U.S, but also from China and Europe, will be affected.

Other firms that will have to pay the tax revenue include Uber, Airbnb, and French online advertising specialist, Criteo. "If these two criteria are not met, the taxes will not be imposed", Le Maire said.

The French tax will apply retroactively to the beginning of 2019, making it one of the first such taxes to go on the books anywhere in the world.

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The Finance Minister noted that levying of new tax regulations would not violate any terms of tax agreement which France signed with the United States.

Ireland, Denmark and Sweden have blocked European Union efforts to devise a new tax for fear of detering investment, and Germany has proved lukewarm on the issue, fearing USA retaliation against its auto industry. Naturally, they tend to opt for the countries with the most favorable rates, such as Ireland and Luxembourg.

Left-wing politicians denounced the measure as too feeble.

The French government has introduced a 3pc tax on the French revenues of internet giants like Google, Amazon and Facebook.

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.

France chose to implement the tax after a similar proposal at the European Union level failed to get unanimous support from member states.

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".

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