France will impose an annual tax of $500 million on technology giants such as Google

 France will impose an annual tax of $500 million on technology giants such as Google

Guardian screenshot

According to the Guardian on December 17, French Economy and Finance Minister Bruno LeMaire said at a news conference that France would take the lead in levying taxes on Internet giants in the EU.

He added, Whatever happens on January 1 next year, the tax will be implemented throughout 2019, and we expect to receive 500 million euros in tax revenue.

Reportedly, the tax, known as the GAFA tax, comes from the acronyms of Google, Apple, Facebook and Amazon, targeting high-profit Internet technology giants. The effective tax rate of this type of company is usually lower than that of other companies.

At the same time, large technology companies usually use tax incentives in Ireland, the Cayman Islands, Bermuda and other countries to avoid taxes, which leads to the EU countries often entangled with American technology companies on tax issues, and the EUs attitude towards combating corporate tax avoidance is becoming more and more tough.

According to Agence France-Presse, at an informal meeting of EU finance ministers in early September, the EU said that negotiations on Levying digital taxes on large multinational enterprises had made progress, with the goal of reaching agreement within this year.

However, some EU member states, such as Google and Apples headquarters in Europe, Ireland, Finland and Czech Republic, are opposed to GAFA taxation. They believe that taxation within the EU alone will undermine the EUs tax agreements with other countries. There is no agreement among member states on how to define the digital services in the revenue of technology companies.

Feeling the resistance of promoting GAFA tax within the EU, France tried to achieve its goals through global agreements and cooperation with other countries in the EU.

The Organisation for Economic Cooperation and Development, or OECD, is working to develop global taxation standards for technology giants. At the same time, France and Germany are actively cooperating to levy a 3% advertising sales tax in the EU by 2021 in response to the tax avoidance of some enterprises transferring to countries with low tax policies.

But the slow progress of OECD and the French-German plan prompted France to abandon them and unilaterally promote the GAFA tax collection plan.

According to the French magazine Capital. fr, the GAFA giants currently pay less than 50 million euros in taxes. After the implementation of the new GAFA tax law, the French government is expected to receive more than 10 times the tax revenue.

The idea of a GAFA tax comes from the European Commission. In March last year, the Commission proposed a tax rate of 3% on revenue generated from digital services by these large companies. France will fight to the end for this digital tax, said French President Mark Long.

As soon as news of GAFAs new tax came out, netizens commented one after another, pointing directly at the big cake of French governments eyebrow for Internet giant tax.

There are also netizens who make fun of the tax incident, linking it with the vigorous yellow vest movement in France.

Within the European Union, in addition to France, Britain is also considering taxing Internet technology companies.

In October, Philip Hammond, Britains Chancellor of the exchequer, said, Its very unfair that technology giants get a lot of income in the UK but fail to pay taxes proportionally. He said the British government planned to introduce a digital service tax on technology giants in April 2020 at a 2% tax rate.

Hammond said that although global agreements such as OECD were the best long-term solution, progress was slow and we cant talk about it forever.

Source: Author of Observer: Editor-in-Charge of Chen Rui: Li Hang_BJS4645