The French Government introduced a tax on Wednesday aimed at giant tech companies’ digital sales, in an attempt to curb the practice of paying global levies in countries with lower tax rates.
The bill, which is to be discussed by cabinet ministers before being submitted to parliament, is a proposal by Economy Minister Bruno Le Maire to have companies pay a tax of three percent on much of their digital sales in France, France24 reported.
The tax would apply to the French revenues of roughly 30 major companies, most of which are US-based. Le Maire estimated the tax will raise roughly 500 million euros ($565 million) per year.
The tax, which has been dubbed the ‘GAFA’ tax by the French media — a French acronym that reflects that it was designed with tech giants like Google, Apple, Facebook and Amazon in mind — targets digital companies with global annual sales of more than 750 million euros ($849 million) and sales in France of at least 25 million euros.
“If these two criteria are not met, the taxes will not be imposed,” Le Maire said.
According to Le Maire, the new tax will cover areas such as advertising, websites and the resale of private data. The Economy Minister also implied that “there will also be a French firm and other originally French firms that were later bought by big foreign companies.”
“We always pay all of the taxes due and comply with the tax laws in every country we operate in around the world. Google pays the vast majority of its corporate income tax in the United States, and we have paid a global effective tax rate of 23% over the last ten years,” a spokesperson for Google told CNBC via email on Wednesday.
A Facebook spokesperson also issued a statement to CNBC noting that the company “pays all taxes required by law in the countries where it operates” and hoped that the Organisation for Economic Cooperation and Development (OECD) will “create a clear, sustainable global agreement on tax” in Europe. Facebook also told AFP that as of last year all advertising revenues generated from French clients were now registered as French income.
The French bill is being presented as the government seeks a means to pay for financial relief measures to ease the “yellow vest” protests that have roiled the country for three months, France24 reported.