France will introduce its own digital tax in 2019 if the European Union fails to agree on a unified plan, Finance Minister Bruno Le Maire said on December 7 while adding that most internet giants pay 14% less corporate tax than small and medium companies.
Le Maire effectively gave his EU partners a deadline, making clear that France would move to adopt a so-called GAFA law (Google, Apple, Facebook and Amazon) if there is no EU-wide progress by March 2019. Hopes for an EU-wide agreement by December 31 are now dim, particularly now that the UK is also considering a similar tax to the one put forward by Paris.
Le Maire said the French government is considering a tax on online advertising that would target Facebook and Google, but leave Amazon and Apple unscathed.
European tax rules require unanimous backing by all EU members.
A plan brokered by the Paris-based OECD developed economies club envisages digital giants to pay 3% in the market where they operate. That would yield a symbolic revenue of €1.3 billion per year and would not come into force before 2021.
Ireland, Denmark, and Sweden are, however, resisting the 3% charge, saying that companies should continue to pay taxes where they are headquartered rather than where they operate.
Germany has adopted a halfway position, expressing concerns that the tax could stifle digital innovation.