France unveils draft laws to make digital giants pay more tax

Under the proposals presented today in French parliament, large companies operating in France would face a tax of three percent on their digital sales in the country.

Economy Minister Bruno Le Maire outlines the legislation ERIC PIERMONT / AFP

Under EU law, internet giants can choose to report their income in any member state, prompting them to choose low-tax nations such as Ireland, the Netherlands or Luxembourg.

But the French Economy Minister Bruno Le Maire said on Wednesday, that “Nobody can accept that the biggest tech and digital companies in the world pay 14 tax points less than other companies in Europe and elsewhere”

"With the introduction of this new tax, the government aimed, he said, to “invent the tax system of the 21^st century.”

Le Maire reckons about 30 companies will be liable and the amount raised from such a tax on sales from January 1, 2019, should soon reach 500 million euros

Only companies that have a turnover of 750 million euros globaly and €25 million  in France will be liable for the tax the economy minister does not want to stifle the growth of French start-ups or create problems for SMEs embracing digitalization.

Key Yellow Vest demand

The move comes as the French government is under pressure, from the Yellow Vest movement and others, to spread the tax burden more fairly - but it does not go far enough according to some campaigners.

Raphaël Pradeau of the anti-globalisation lobby group, Attac, said the proposed tax is "symbolic and does not solve the problem of massive fiscal evasion".

President Macron had hoped to persuade his European partners to introduce an EU-wide tax on global tech and internet groups

However Ireland, Denmark and Sweden blocked the idea, fearing an impact on inward investment, while Germany worried about possible US retaliation against its car industry.

So the French government has gone ahead with its own legislation while hoping an agreement might be reached globally by 2020.

The legislation is known as the GAFA tax, after the name used in France to denote companies like Google, Apple, Facebook and Amazon.