What is France's new digital tax?

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Amazon (NASDAQ:AMZN), Apple (NASDAQ:AAPL), Facebook (NASDAQ:FB) and Google (NASDAQ:GOOGL) are facing a new digital services tax in France.

France's Senate gave the final approval to a tax on big technology companies with revenue of more than €750m of which at least €25m generated in France.

The 3% levy is due to kick in retroactively from the start of 2019.

Now tech giants are able to pay little or no corporate tax in countries where they do not have a large physical presence. They declare most of their profits where they are headquartered.

It is expected to raise about €400m and open a new front in a trade row between Washington and the European Union.

Donald Trump has instructed his most senior trade official to conduct a so-called Section 301 investigation into France's digital services tax.

Same investigation was previously conducted into China's practices and resulted in a full blown trade war, which is weighing on the global growth.

The French government says the tax will end if a similar measure is agreed internationally.

The OECD is conducting multilateral discussions over how to tax international technology companies. The US said it would continue those discussions while conducting its own examination.

The European Commission estimates that on average traditional businesses face a 23% tax rate on their profits within the EU, while internet companies typically pay 8% or 9%.

Imposed all across the EU a similar tax would collect around €5 billion per year.

Brussels' efforts stalled since an EU-wide levy has to be approved by all members, but Ireland, the Czech Republic, Sweden and Finland raised objections.

View on euronews

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