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France will introduce its own tax on large internet and technology companies from January 1, finance minister Bruno Le Maire said 17 December 2018 amid difficulties in finalising a new EU-wide levy. France has been pushing hard for a new so-called “GAFA tax” -- named after Google, Apple, Facebook and Amazon -- to ensure the global giants pay a fair share of taxes on their massive business operations in Europe.
The tax will be introduced whatever happens on January 1 and it will be for the whole of 2019 for an amount that we estimate at €500 million ($570 million).
The low tax rates paid by US tech giants in Europe has repeatedly caused anger among voters in many European countries but the 28-member bloc is divided on how to tackle the issue.
Ireland, which hosts the European headquarters of several US tech giants, leads a small group of otherwise mostly Nordic countries that argue a new tax could lead to reprisals against European companies and stoke anger in the US.
France and Germany agreed earlier this month to introduce a new joint measure in 2021, which would give the Paris-based OECD time to work on a new global solution.
The Organisation for Economic Cooperation and Development, which groups major world economies, is working on a proposal for a new international scheme that would regulate taxation on tech firms.
Policymakers across the world have had difficulty in taxing the US-based giants who dominate their sectors internationally, but who often route their revenues and profits via low-tax jurisdictions to reduce their liabilities.
France’s move to introduce the tax on January 1 could be driven by domestic budget concerns, with the finance ministry looking for new sources of revenues and savings.
Under pressure from “yellow vest” protesters, President Emmanuel Macron announced a series of measures last week for low-income families which has left a multi-billion-euro hole in the 2019 budget.
Some other EU member states such as Britain, Spain and Italy are also working on national versions of a digital tax, with Singapore and India also planning their own schemes.