One dominant trait that is synonymous with major corporations is their desire to find legal ways to pay fewer taxes on their income.
However, in the past few months, authorities in Europe have turned their sights on tech giants, with the aim to compel them to make even more tax payments for the businesses they generate from their countries.
According to a report by local media Le Parisien, the government of France will impose a five percent tax on revenues generated by tech giants in the country. The new levy was created in response to the revelation that large tech companies use complicated structures to reduce their tax bills across individual EU states.
Who Will be Affected?
In an interview with Le Parisien, French Minister of Finance Bruno Le Maire stated that the imposition of the tax was part of the government’s commitment to ensuring “fiscal justice” and the protection of smaller, emerging tech companies, which seem to have had their growth stifled thanks to the domination of these large corporations.
To that end, the first set of criteria for the imposition of these taxes would be that a company, to be eligible, must earn annual incomes of at least 700 million Euros globally, of which no less than 25 million Euros should come from France alone.
Le Maire clarified that the tech companies affected by the new taxation system would be impartial and dispassionate, as it will compel new tax rates for tech companies across the United States, Germany, China, Spain, and Great Britain.
French companies, locally and internationally owned will also be affected by the tax system.
Data Selling & Advertising will Get Less Attractive in France
The new tax system, if implemented will earn the French government at least 500 million Euros ($568.3 million) extra revenue. Every major tech giant will be caught in the new tax web due to the criteria used.
Companies that earn incomes from acting as intermediaries between businesses and their customers (such as Amazon) will be affected, and those that offer personal data sales for advertising purposes (a much larger pool of targets, with names such as Google, Apple Inc., Facebook, and Uber, amongst others) are not left out.
However, companies which sell their own manufactured products on their retail sites won’t have to pay the tax. The French government is reportedly taking action since a continental-wide plan to tax the tech companies failed in December due to the requirement that all 28-member states need to unaninously vote to approve the legislation before it goes live.
La Maire will present a draft of the tax system to the cabinet on March 6, before it moves to the French parliament for a final resolution.
However, while many in France have been protesting the imposition of higher taxes on tech companies, there is also a negative impact of this imposition that the French government will have to deal with.
France already entered into a deal with Apple which will see the company remit 500 million Euros in back-taxes. The government also recently fined Google 50 million Euros ($57 million), claiming that the company failed to abide by the General Data Protection Regulation (GDPR) when new users of Android phones set up their devices.