France Warns Big Tech To Pay Digital Tax In December

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Pay up, pay up. France issues notices to big name tech firms such as Amazon and Facebook, to prepare to pay digital tax levy from next month

France has reportedly issued notices to big name tech firms in the country, warning they are liable for its digital tax levy.

According to Reuters, the French Finance Ministry sent out notices warning tech firms they will have to pay the digital tax from December.

It comes after French Finance Minister Bruno Le Maire in October urged the European Union to press ahead with plans for a bloc-wide digital tax.

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Digital tax

Tech companies have long been criticised by lawmakers for their tax practices that sees them reducing their tax bills by booking profits in low-tax countries (such as Ireland) regardless of the location of the end customer.

Plans for an EU-wide digital tax have previously failed upon the objections of certain countries, forcing member states, most notably France, to push ahead with their own national levies earlier this year.

That sparked outrage from US President Trump and US officials investigated the French digital tax policy.

That dispute was postponed when France offered to suspend its digital tax on tech companies’ income in France until the end of the year while the OECD (organisation for Economic Cooperation and Development) negotiated new rules for the cross-border taxation of big digital companies.

But President Trump pulled the US out of OECD digital tax negotiations in June, citing a lack of progress.

Pay up

But now Reuters has reported that the French Finance Ministry said it will collect the tax in December as planned if the talks proved unfruitful.

The 140 nations involved in the OECD talks agreed last month to keep negotiating until mid 2021.

“Companies subject to the tax have received their notice to pay the 2020 installment,” a Finance Ministry official was quoted as saying.

France’s so-called GAFA tax targets major digital firms and hopes to raise €500 million (£451m).

This French digital tax will impose a 3 percent levy on revenue from digital services earned in France by companies with revenues of more than 25 million euros locally, and 750 million euros worldwide.