France to tax tech giants from 2019 as EU fails to act

In early December, Economy Minister Bruno Le Maire said France would give the EU until March to come up with a deal on taxing US internet giants. But ten days later he announced the tax would be introduced on January 1.

France said at the start of December it would start taxing Google, Apple, Facebook and Amazon, the big US technology companies known as GAFA, if European Union finance ministers failed to agree on a bloc-wide digital tax next year.

Ten days later Le Maire said due to difficulties in finalizing a new EU-wide levy, France would introduce its own tax on the large internet and technology companies from January 1.

Le Maire said he hoped the new tax would raise €500 million ($570 million) in 2019.

“I am giving myself until March to reach a deal on a European tax on the digital giants,” Le Maire had told France 2 television. “If the European states do not take their responsibilities on taxing the GAFA, we will do it at a national level in 2019,” he added.

France, backed by Germany, had proposed a comprehensive digital services tax (DST) to cover all 28 EU member states.

But Ireland vetoed the move, arguing that it would exacerbate US-EU trade tensions. Dublin also said the bloc should wait until the Organisation for Economic Co-operation and Development (OECD) had presented its tax proposals in 2019.

French presidential election candidate for the En Marche ! movement Emmanuel Macron gestures as he delivers a speech during a meeting in Saint-Laurent-Blangy, on April 26, 2017, ahead of the second and final round of the presidential election. / AFP PHOTO / Eric FEFERBERG (Photo credit should read ERIC FEFERBERG/AFP/Getty Images)

France and Germany then presented an alternative plan at a meeting of EU finance ministers. It proposed slapping 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.

“It’s a first step in the right direction,” Le Maire said after the meeting, “which in the coming months should make the taxation of digital giants a possibility.”


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