Silicon Valley hit with new digital tax in France

Silicon Valley hit with new digital tax in France”

France is set to unveil legislation on Wednesday to increase taxes on global internet giants such as Google and Facebook, putting it among a vanguard of countries seeking to force the companies to pay more in the markets where they operate.

It follows similar plans in the United Kingdom, which last year said it was introducing a tech tax that could raise up to £400 million, or $510 million, a year starting in 2020. That effectively means the companies pay next to no tax in countries where they have large operations. It says the 3% tax could initially raise about €500 million, or $565 million, but this number could rise quickly.

According to Le Maire, the added tax would aim at least 30 companies, majority of which would likely to be American and Chinese, however, a few German, Spanish, British and French firms, alongside firms of French origins having bought by foreign companies, would also be required to pay that added taxation.

He said the tax will not affect companies directly selling their own products online. "These digital giants use our personal data, make huge profits out of these data. then transfer the money somewhere else without paying their fair amount of taxes".

For Le Maire, taxing the companies "is a question of fiscal justice" as "digital giants pay 14pc less tax than small- and medium-sized European companies".

France's move to legislate comes after aggressive action from tax authorities to pursue the companies in the courts, with mixed results.

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This tech tax has not to be confused with the so-called YouTube OTT video tax, set up in France in early 2018 and applied to all platforms such as YouTube, Netflix, or Prime Video, so as to help fund local movies. The British government has just concluded a consultation on the proposals.

The UK said its Digital Services tax was an "interim measure" until the European Union could construct its own tax on worldwide tech giants. In late November 2018, a proposed European Union digital tax was blocked by Ireland, Sweden, Denmark, and Germany.

Le Maire has been vocal about pushing through EU legislation, and he told the French newspaper Le Journal de Dimanche in January that a European agreement was "within reach".

"It's as if we accept that such firms can practice tax evasion in return for a few crumbs", he said.

And Manon Aubry, a leader of the France Unbowed party, told France Inter radio it was like "putting a plaster on a wooden leg".

While the tax will only apply to France, he said he would continue to campaign to develop it internationally.

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