France has implemented a digital tax on tech giants such as Google and Facebook after the European Union failed to reach an agreement before Christmas.
France had indicated last month it would press ahead with its own taxation on tech firms after EU finance ministers failed to agree a tax on digital revenues in December, despite France and Germany championing a compromise digital tax that was much narrower in scope than a plan originally proposed in the spring of 2018.
They had proposed a 3 percent tax on European advertising sales by digital companies, rather than the broad tax on the total revenues of large digital firms originally suggested.
But this compromise failed to be agreed, leaving France to press ahead with its own tax which came into force on 1 January 2019.
France’s so-called GAFA tax targets major digital firms and hopes to raise €500 million (£451m).
The tax has long been championed by French president Emmanuel Macron as a way to show that governments are capable of taking action to rein in large tech companies, which are seen as paying minimal tax in Europe due to their use of accounting loopholes.
The digital tax had been defeated in its previous form, due to opposition by Ireland, Scandinavian countries and Luxembourg. It needs unanimous approval by member states.
A number of countries, including the UK, have proposed national digital taxes with a broader base.
Austria is reportedly the next European nation looking to impose a specialised ‘tech tax’ on tech giants.
France and Germany meanwhile have reportedly also reached agreement on a 3 percent tax on digital ads, and plan to introduce it in 2021 unless OECD members agree a global approach before that date.
For their part, tech companies have previously defended their tax structures, and insist they abide by tax laws as they’re currently written.
But British MPs have previously criticised tech companies’ tax arrangements as “immoral”.
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