France Not Waiting On EU To Implement Digital Services Tax

; posted on
December 20th, 2018

French Finance Minister Bruno Le Maire announced on 17 December 2018 that France will not be waiting for an agreement on a digital services tax in the EU and is planning to introduce its own tax targeting Google, Apple, Facebook, and Amazon (GAFA).

France Initiative to Introduce Its Own Tax

With the so-called Yellow Vest movement forcing concessions that have widened the country’s budget shortfall, the French government is accelerating a plan to place hefty taxes on American technology giants (by introducing new tax targeting GAFA) that have long maneuvered to keep their bills low while reaping huge sums of money. The tax would most likely cover not only the companies’ direct sales in France but also revenue from online marketplaces and the resale of private data. As such, this tax is expected to raise tax revenue of approximately EUR 500 million in 2019.

Details of the proposal are expected after December 20 and vote to be held on December 31. However, even the proposal has not been released yet, the proposed tax faced opposition from countries including Ireland, which hosts the European headquarters of several technology companies, including Google and Apple. Ireland argues that a new tax could lead to reprisals against European companies and stoke anger in the US.

Apart from GAFA tax, France also has been working with Germany on plans for a 3% tax on EU advertising sales with a tax base referring to the placing on a digital interface of advertising targeted at users of that interface. The 3% tax will enter into force on 1st January 2021

Implementation of the Proposed Tax

The GAFA tax will be introduced on 1 January 2019, regardless of whatever happens within the EU. The prime minister reiterates that as of January, the government will ensure that the targeted multinational entities are subject to a full year of taxation as these MNEs pay on average about 14 percentage points less in tax than domestic companies.

Sources: Media Post, Pymnts, News Stand Hub, The Guardian

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