France will move unilaterally to introduce a digital tax on internet giants by January 1, Finance Minister Bruno Le Maire told journalists on December 17, only weeks after the French government first set a March deadline in order to build consensus over the need for an EU-wide digital tax.
Since the original decision, fiscal pressure has begun to mount against President Emmanuel Macron, who had to make a series of tax concessions following weeks of violent protests by the Yellow Vest movement.
An EU consensus for a digital tax that covers the whole of the European Union has come up against stiff resistance in Denmark, Sweden, Finland, the Czech Republic, Luxembourg, and Ireland, all of whom want to maintain the current status quo where digital giants pay taxes in the locations where they are headquartered rather than income incurred in the market where they operate.
France is now moving unilaterally to impose a tax on digital advertising revenue in France instead of on worldwide profits. The projection is that technology giants such as Google, Amazon, and Facebook will be invited to pay a total tax of no less than €500 million a year.
The French national tax is in line with the European Commission’s proposals for a 3% tax EU-wide tax on digital revenue for companies with a worldwide turnover of over €750 million, but critics say that France will be violating accepted international norms on the equal treatment of companies.
The Paris-based Organisation for Economic Cooperation and Development (OECD) is also working towards on a proposal for a new international scheme that would regulate taxation on tech firms.
Meanwhile, the political pressure that had engulfed Macron’s administration since the outbreak of the Yellow Vest protests has cooled in recent days. Weekend rallies called by demonstrators were less than a quarter of those seen two weekends ago when members of the Yellow Vests rampaged through the streets of central Paris and destroyed vast amounts of property in the process.
On the fiscal front, however, tensions remain tangibly present as the European Commission must be even-handed when it comes to the bloc’s fiscal discipline, particularly in light of its ongoing standoff with the Italian government.
Macron’s government now projects a 3.2% deficit, which is above the 3%, plus an additional 0.2% for one-off emergency one-off payments, which is well above the ceiling set by the EU’s own fiscal compact.
According to Prime Minister Edouard Philippe, France is now seeking €4bn in additional tax revenue or expenditure savings.