The 3% levy has upset the US, which announced an investigation.
Background: Reforms to the taxation of digital services (i.e. online platforms) have been high on the agenda of policymakers around the world for the last two years. In 2018, the European Commission tried, but failed, to define a common approach for the EU. As a result, several countries (Austria, Belgium, Czech Republic, France, Italy, Spain, UK) developed their own proposals.
The French are the first movers: This week, the legislative proposal announced by the Finance Minister Bruno Le Maire at the end of 2018 has been approved by the Senate, and is now definitely adopted. This makes France the first country in the world to adopt legislation. The tax imposes a 3% on digital revenues (i.e. advertising revenue, commissions earned by the platforms, revenues from the resale of personal data) generated in France. The tax was labelled as the ‘GAFA tax’, since it primarily affects tech giants such as Google, Apple, Facebook, and Amazon; however, the French government estimates it will hit about 30 companies worldwide, since it applies to firms with a digital annual turnover of more than €750m worldwide, and of more than €25m in France.
The US are not impressed: The French government maintained it is happy to waive the tax once an international agreement is reached, as a result of the work ongoing within the OECD, which is progressing slowly. In the meantime, the US government has expressed its concern for the tax, and announced an investigation to determine whether it is discriminatory against US firms, which could result in retaliatory tariffs.
