France close to launching 3% digital services tax

France is likely to introduce a digital services tax after the Senate voted heavily in favour of the government’s plans, although with an amendment that the tax should only be a temporary measure for three years

Dubbed GAFA (for Google, Apple, Facebook and Amazon), the proposed 3% tax would apply to tech companies with worldwide revenues of at least €750m (£662m) and domestic revenues in France of €25m (£22m).

It will be levied on multinationals which monetise user data from advertising, carry targeted advertising, and internet platforms which act as intermediaries between buyers and sellers, and is expected to raise around €500m annually.

The Senate - the upper house of the French parliament - passed the measure by 181 votes in favour, with just four against, and 158 abstentions.

However, the Senate also legislated that the tax would be a short-term measure and should expire in 2022, after a three-year period, a proposal which the French government has opposed.

In a radio interview, finance minister Bruno Le Maire said: ‘The approval of digital tax is a very strong message sent by France. It's a signal of fiscal fairness and of our desire to rebuild the international taxation of the 21st century.’

The Bill will now go to a joint committee of the Senate and National Assembly to negotiate the final details.

Also this week Margrethe Vestager, European Commissioner for Competition, who is in the running to become the next president of the European Commission, expressed strong support for an EU-wide digital services tax, adding that it would be require worldwide support if it were to be effective.

Addressing the May plenary session of the European economic and social committee, Vestager said: ‘The Commission has been pushing for digital taxation because we need a global solution; it's unacceptable that some companies pay taxes and others don’t.

‘If we can have an EU level solution, we will push for a global solution. But today we don't have an EU solution.’

French Digital Services Bill

Pat Sweet

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