As of December, Facebook, Google, Amazon and other technology giants will pay digital taxes on French territory, finance minister Bruno Le Maire announced on Wednesday. The European Union has long discussed the updating of international tax rules, but with the pandemic, negotiations have been left for next year. France, however, decided not to wait.
“Either the extension is accepted for months, maybe years, or fair taxes on digital activities are considered urgent and in this case, Europe sets the example,” Le Maire told Reuters.
The French initiative was already expected; last year, the government created a 3% tax on revenue from digital services provided by the so-called Big Tech with more than € 25 million ($ 27.7 million) of revenue in France and € 750 million ($ 832 million) worldwide.
At the time, the countries of the European Union undertook to launch a single proposal to be discussed at an assembly at the Organization for Economic Cooperation and Development (OECD), in order to update cross-border tax rules for the digital world. As a result, France decided to suspend the application of the new rate.
Current US Treasury Secretary Steven Mnunchin is against changing the current rules (the renewal would hit American giants in the sector, who are now legally transferring their profits to countries with lower taxes, such as Ireland).
In the past five years, both Facebook (with European headquarters in Ireland) and Apple have been fined an amount of $ 24.6 billion for receiving “illegal benefits” in Ireland and circumventing US tax authorities.
According to 2018 data released by the European Commission, global technology companies pay an average tax of 9.5%, compared to the 23.2% owed by traditional companies.