France's 3% tax to hit Google and Facebook

France is imposing a 3% tax on big digital companies.

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Known as the “Gafa tax” after the US firms it targets (Google, Amazon, Facebook and Apple), it starts this year and is imposed on annual turnover in France.

It is expected to bring in €450million this year.

France is the first country to impose this tax and wants other OECD countries to follow.

Firms such as Amazon and Google operate globally and take advantage of optimisation fiscale to declare advertising income in lower-tax countries.

The EU planned to bring in a “Gafa tax” but met opposition from countries such as Ireland and Luxembourg, which have low taxation rates.

Sweden is also opposed. Some countries fear the US will bring in a similar tax on EU firms.

Economy Minister Bruno Le Maire said: “It is better to have an imperfect solution than discussion without action.”

The tax applies to all digital companies with global revenue above €750million, and above €25million in France. Around 30 companies are concerned, including Airbnb and Booking.