French Bill proposes new tax for digital companies

French Bill proposes new tax for digital companies

France has imposed its own tax redistribution reforms on US technology firms. The French finance minister, Bruno Le Maire, yesterday announced a Bill that would impose a 3 per cent tax on all revenues deemed to have been generated in France by digital companies with more than EUR25 million in France and EUR750 million globally.

Under the new measure, it is believed some 30 companies could now see themselves included in the new provisions, including Google, Apple, Facebook and Amazon, which is why it is being dubbed the ‘GAFA’ Tax.

Estimates put the revenue that could be raised through this move as being in the order of EUR500 million a year, and this new tax would be additional to any existing taxes that these companies already pay. Reports claim the move is being made to create a sense of tax ‘justice’, with Le Maire saying: ‘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.’

At the moment, it is believed digital companies pay less than 10 per cent tax in the EU, well below the effective rate of 23 per cent that other firms pay.

The move has not gone down well in certain quarters. Christian Borggreen is head of the European branch of the Computer & Communications Industry Association (CCIA). Its members include ‘GAFA’ companies (minus Apple) as well as eBay and Intel. He said: ‘We are concerned the French digital tax proposal would end up harming French startups, investments and increase consumers prices.’

He added: ‘France should lead efforts to achieve international tax reform, rather than taking unilateral actions that risk undermining global efforts.’