France to impose new tax on internet and tech giants

France has said it will impose its own tax on large internet and technology companies from January 1.

French finance minister Bruno Le Maire said at a news conference in Paris on Monday that the measure would be introduced “whatever happens”.

“It will be for the whole of 2019 for an amount that we estimate at 500 million euros [$570 million],” he said.

Monday’s move could help Paris close a multibillion-euro hole in the 2019 budget left by President Emmanuel Macron’s new measures for low-income families, which were introduced last week to appease the “yellow vest” protesters.

France has long been pushing hard for a so-called “GAFA tax” – named after Google, Apple, Facebook and Amazon – to ensure the global giants pay a fair share of taxes on their massive business operations in the European Union.

The low tax rates paid by the US tech giants in the EU has repeatedly caused anger among voters in many European countries, but the 28-member bloc is divided on how to tackle the issue.

Fears of US anger

Ireland, which hosts the European headquarters of several US tech giants, leads a small group of mostly Nordic countries who argue that a new tax could lead to reprisals against European companies and stoke anger in the US.

Any tax changes must be approved unanimously by member states of the EU.

Earlier this month, France and Germany agreed to introduce a new joint measure in 2021, which would give the Paris-based Organisation for Economic Cooperation and Development (OECD) time to work on a new global solution.

The OECD, a forum for major world economies, is working on a proposal for a new international scheme that would regulate taxation on tech firms.

Policymakers across the world have had difficulty taxing the US-based giants who dominate their sectors internationally but often route their revenues and profits via low-tax jurisdictions to reduce their liabilities.

Some other EU member states such as the United Kingdom, Spain and Italy are also working on national versions of a digital tax, with Singapore and India also planning their own schemes.