France To Impose A New Tax On Large Tech Companies Alone

After France failed to make its European Union partner countries to agree to a EU-wide imposition of a new tax on big technology companies, the country has decided to go ahead alone with it.

About €500m in its first year would be raised by the new tax which would get implemented from January1, according to the French finance minister, Bruno Le Maire.

GAFA tax – named after Google, Apple, Facebook, Amazon, had been formulated by France and it had been pushing for its EU wide implementation. However there was severe opposition to the new tax by some EU members, including Ireland, which is the home of the European headquarters of a number of US technology companies, which includes Google, Apple and Facebook.

Proposals for an international scheme that would regulate taxation on technology companies was being worked upon by the Organisation for Economic Co-operation and Development (OECD) which is a group of major world economies.

France and Germany have also been working together to develop plans for a 3 per cent tax on EU advertising sales and that is scheduled to get implemented from 2021.

The new taxation plans are a part of the strategies to be undertaken by European nations to counter the often complex corporate structures which are created by a number of companies which generate large revenues from Europe but uses the structures to reduce their taxes by transferring their profits to low tax countries such as Ireland.

France has been prompted to move ahead with the new taxations alone because there has been very slow progress on both the OECD and the Franco-German taxation proposals.

“The tax will be introduced whatever happens on 1 January and it will be for the whole of 2019 for an amount that we estimate at €500m,” Le Maire told a press conference in Paris.

There have been several EU countries that have also expressed their eagerness to impose new taxes on technology companies and that include the UK because such governments are well aware of the public frustration vented at such tech companies that does very little for the local national economies while making huge profits from the those very economies.

For example, in his budget in October, UK chancellor, Philip Hammond, pledged to impose a new digital sales tax to make sure that “global giants with profitable businesses in the UK pay their fair share”.

He added that it was not possible for the UK to wait any longer for the “painfully slow” discussions at international level and hence would impose a 2 per cent tax on some specific types of sales, which, according to him, would generate about £400 million a year in new tax revenues.

Other EU countries such as Spain and Italy, as well as other countries such as Singapore and India, are also striving to develop their national versions of a digital tax.

(Adapted from TheGuardian.com)

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Categories: Economy & Finance, Geopolitics, HR & Organization, Regulations & Legal, Strategy, Sustainability, Uncategorized

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