France to go ahead with new tax on major tech companies from January 1

On Monday, the French Minister of the Economy, Bruno Le Maire, announced that France will impose new taxation on major tech companies, collectively known as GAFA (Google, Apple, Facebook, Amazon etc.) from Jan. 1, without waiting for EU legislation on the subject.

“The tax will be introduced whatever happens on 1 January and it will be for the whole of 2019, for an amount that we estimate at €500 million,” said Bruno Le Maire during a press conference in Paris.

The measure “could be introduced as part of the PACTE bill (designed to foster economic growth)”, which was approved at the first reading in Parliament, and should be brought before the Senate early next year. “It’s a possibility, not the only one,” said Le Maire, who also indicated that the GAFA tax, which France has so far canvassed for within the EU unsuccessfully, will not only apply to the revenues identified by the European directive, but will also extend to “advertising revenues, websites and the sale of personal data.”

On Tuesday afternoon, the French Secretary of State for Digital Affairs, Mouni Mahjoubi, explained to Parliament which business activities will be taxed. Starting from web marketplaces. “Who pays? French citizens and SMEs, who buy from other French citizens and SMEs. And the margin between them disappears. We can no longer accept this.” The two other business activities singled out by the new taxation are targeted advertising and personal data sales. “France will not turn into a digital colony,” said Mahjoubi.

As for Europe-wide taxation, Le Maire has not given up on it, and still hopes it will be adopted by March. “Our determination to obtain a unanimous European decision on this directive before the month of March 2019 is absolute,” said Le Maire, adding that he recently discussed this with Germany’s Finance Minister Olaf Scholz.

“We are going to take the initiative, together with my German counterpart, to convince the few states which are still opposed to this Europe-wide tax on tech companies,” said Le Maire, adding “I hope that Europe will live up to its ambitions and values.”

The French government is relying on this tax to raise €500 million from major tech companies, in order to fund the social policies announced a week ago by President Emmanuel Macron, whose total cost is estimated at approximately €10 billion.