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Daily Tax Report: International

France’s National Assembly Approves Tax on Tech Giants (2)

April 9, 2019, 12:01 PMUpdated: April 9, 2019, 5:08 PM

French lawmakers approved the country’s proposed tax on the revenue of digital giants like Alphabet Inc.'s Google and Facebook Inc. during a midnight session vote in the National Assembly.

The 3 percent levy targets some large digital businesses with 750 million euro ($845 million) in worldwide revenue and 25 million euros in domestic revenue. Among the companies netted by the tax are those that sell online advertising, user data to target online advertising, and online marketplaces.

  • The digital tax proposal, included in Article 1 of the French tax bill, was approved overwhelmingly by the National Assembly.
  • The agenda for a second round of voting will be set at a Senate meeting April 9.
  • The draft text of the law approved by the National Assembly included an amendment to include a domestic double taxation clause. This could prove controversial since it may exclude the only French digital giant, Criteo SA, that would be netted by the new digital tax.
  • “Why has France committed itself for two years in this fight, without targeting any State, any nation in particular, but with an objective of justice and fiscal efficiency? It does so because we are facing an economic revolution to which we have so far made no fiscal response,” said Bruno Le Maire, France’s minister of economy and finance, April 8 in his opening remarks during the debate.
  • Article 2 of the digital tax bill would postpone a planned corporate tax reduction for companies that have more than 250 million euros ($282 million) in sales. Le Maire said the cuts would be postponed to help cover the costs of a hike in spending following last year’s Yellow Vests protests, which were sparked by government plans to raise diesel and gasoline taxes.
  • The National Assembly has yet to vote on the corporate tax provision under Article II of the tax bill. Once all provisions in the tax bill are approved, including the digital tax provision, it will proceed to the Senate, France’s upper house, which may make further amendments.

To contact the reporter on this story: Hamza Ali in London at hali@bloombergtax.com

To contact the editors responsible for this story: Meg Shreve at mshreve@bloombergtax.com; Penny Sukhraj at psukhraj@bloombergtax.com