France introduces extra tax on digital giants

The new tax has been dubbed GAFA after digital giants Google, Apple, Facebook and Amazon

France is to impose an extra tax on digital giants such as Google, Apple, Facebook and Amazon from this year, in part to finance the social measures announced in response to the gilets jaunes protests.

After many months of slow negotiations in Europe over the issue, France has decided to unilaterally move ahead with the tax regardless, dubbing it “GAFA” after these four major corporations (Google, Apple, Facebook, Amazon).

Minister for Economy and Finance, Bruno Le Maire, confirmed that France would begin to collect the GAFA tax from January 2019, regardless of negotiations in Europe.

At a press conference in Paris, he said: “The tax will apply from January 1 2019. Across the year, we expect it to raise €500 million.”

As well as an extra tax on the companies’ income, it will also apply to “advertising revenues, platforms and the resale of personal data", Mr Le Maire said.

Giant digital corporations have been found to be paying an average of just 9% in tax in Europe, despite normal businesses being taxed at an average of 23%.

Mr Le Maire has additionally stated that he would like to see a similar tax agreement adopted by all 27 EU states by March this year.

He said: “Our determination to obtain a unanimous European decision before the month of March 2019 is total. [France] will work with my German counterpart [German finance minister Olaf Scholz] to convince the few member states that remain opposed to this European digital tax.”

The government has previously said that the money collected from the GAFA tax will go towards financing the measures announced in December 2018, in response to the gilets jaunes’ protest demands.

French President Emmanuel Macron has also spoken publicly and shared his support for the issue.

Mr Macron said: “Big businesses that make profits [in France] must pay their taxes, it is only fair.”

France is not the only country to move forward on the issue of digital giant taxation without a European-wide agreement.

Spain and the UK have both announced their own version of the GAFA tax, while Italy has also stated plans to do the same should European negotiations continue to drag.

Worldwide, other countries have begun to impose significant taxes on the digital giants, most notably India and Singapore.

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