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France tech tax: What’s being done to make internet giants pay more?

France tech tax: What’s being done to make internet giants pay more?

France is to become the first country in Europe to introduce a tax on tech giants like Facebook, Amazon and Google. The move has upset the US.

So how does it work, what are other countries doing and what could the impact be on these huge companies?

What is the new digital tax?
The French government has approved a 3% tax on large tech companies’ local revenues. This is their total sales in France, rather than the profits they make.

It will apply to tech companies with global sales of over £674m (€750m), and which make more than £22.5m (€25m) a year in France. The government argues they pay little or no tax in France.

The tax will target tech firms that put other companies in touch with customers (like Amazon), digital advertising, and the sale of data for advertising purposes.

The law will be backdated to 1 January 2019.

What will this mean for tech companies?
French Finance Minister Bruno Le Maire has said that about 30, mostly US-based companies, will be hit with the new tax.

It’s thought it will apply to just one French company, advertising firm Criteo, as well as some Indian, British and Chinese firms.

The new tax is expected to raise £360m (€400m) for the French government in 2019, after which it could grow.

Some have argued that it could go even further, given tech companies’ huge incomes.

Jessie Denton, a Paris-based tax lawyer, said the French tax is more of a “symbol” than an effective tax measure. She said the amount it will raise for the French government is below what they’d like from the digital economy.