France plans 5% digital tax on internet giants

Amazon distribution centre in Saran, France. (AFP pic)

PARIS: France intends to tax the revenue of about 30 Internet giants such as Amazon to help ensure “fiscal justice,” according to Finance Minister Bruno Le Maire.

The levy of as much as 5% of French sales will start Jan 1 and potentially raise about 500 million euros (US$570 million) for the state, Le Maire told Le Parisien newspaper. Under the plan, which the cabinet will discuss on Wednesday, the tax will apply to any company with global revenue of more than 750 million euros and French sales above 25 million euros, Le Maire said.

US, Chinese and European companies may meet the levy criteria, including a few French businesses, the report said, as governments grapple with how to tax global Internet giants that can generate huge domestic revenues from limited physical assets.

Spain and the UK are also working on digital sales taxes, while Europe has so far baulked at a continent-wide levy.

France intends to tax revenues from local targeted ads, marketplaces and the re-selling of personal data.

Le Maire said there was no risk of the new measure clashing with a tax agreement between France and the US He discussed the plan with Steven Mnuchin during the US Treasury Secretary’s stop in Paris late last month.

The Organisation for Economic Co-operation & Development could eventually draw up a political accord on digital and data taxation, Le Maire said.