France plans to impose a "digital tax" 

onInternet giants

Our reporter in France, Ge Wenbo

People's Daily (July 03, 2019, 17th edition)

法国计划对互联网巨头征收“数字税”

本报驻法国记者葛文博

《人民日报》（ 2019年07月03日 17 版）

The French Senate recently voted to pass a draft lawon the collection of digital taxes to large Internet companies. According tothe draft, since January 1, 2019, more than 30 global digital businesses suchas Google, Amazon, and Facebook have revenues of not less than 750 millioneuros, while Internet companies with revenues of more than 25 million euros inFrance will be levied. It is equivalent to a digital tax of 3% of its turnoverin France.

French Minister of Economy and Finance Lemer said thatthe imposition of a digital tax is a strong signal from France that France ispursuing fiscal fairness. In March 2018, the European Commission proposed thatthe EU countries should levy a tax on Internet giants at 3% of their turnoverto combat the use of EU tax law loopholes to transfer profits to low-taxcountries. France, Germany and other countries fully supported and activelylobbied, but they were boycotted by Denmark, Finland, Ireland, Sweden and othercountries. These countries have attracted a large number of Internet companiesto transfer profits to them due to the low corporate tax rate. The relevantbill was rejected at the EU finance ministers meeting.

In view of the difficulty in promoting the formationof the EU common position, France has turned to domestic legislation and hopesto use this as a lever to promote the formation of a unified legal text withinthe Organization for Economic Cooperation and Development. Lemer said that oncethe OECD reached a consensus on the issue of digital taxation, France wouldimmediately abolish domestic law.

The French Digital Media Development Forum pointed outthat the large-scale Internet companies around the world rely on tax basetransfer and their strong market position, which not only makes European localenterprises inferior in competition, but also seriously damages European taxinterests. According to estimates, the total amount of tax paid by the Internetgiant in France is currently less than 50 million euros. After theimplementation of the bill, the French government's 2019 digital tax revenue isexpected to be 400 million euros, and by 2022 this figure will reach 650million euros.

At present, there are still many differences in theFrench domestic motion. For example, some Republicans in France have proposedthat the bill lacks international taxation principles and EU treaty support.Taxation based on turnover rather than profit may have a negative impact on thedevelopment of French Internet companies.

The draft passed by the Senate is valid for four yearsbecause of concerns that the tax law may increase the burden on domesticInternet companies. In accordance with the legislative procedure, the Senatewill form a joint committee with the National Assembly to conduct a review anddeliberation on the specific provisions of the bill. After reaching anagreement, formal laws will be issued.

(Report Paris Electric)

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