Tech's tax bombshell: Internet giants will have to pay billions more in tax in Europe as regulators demand 'justice'
- Big tech firms like Amazon, Facebook, and Google are about to be clobbered with new tax bills in Europe, as lawmakers demand they contribute more to the public purse.
- France unveiled plans for a tax on big tech revenues on Wednesday, which it said will raise about €500 million ($565 million) a year.
- It follows similar plans in the UK, which said last year that is introducing tech tax that could raise up to £400 million ($510 million) a year from 2020.
- The EU has been working on drafting similar international legislation, although talks stalled late last year.
Big tech companies including Facebook, Google, and Amazon are going to have start paying billions more in tax in Europe after lawmakers demand they contribute more to the public purse.
France has joined the UK in setting out plans to tax internet giants on the revenue they make locally. It says the 3% tax could initially raise about €500 million ($565 million), but this number could rise quickly.
Finance minister Bruno le Maire unveiled the plan on Wednesday, which would tax digital companies with global revenues over €750 million ($848 million) and French revenue of over €25 million ($28 million).
Le Maire said the tax was about "justice." He added: "These digital giants use our personal data, make huge profits out of these data ... then transfer the money somewhere else without paying their fair amount of taxes."
When asked whether €500 million was a small figure in an interview with radio station Europe 1, le Maire said it was "a starting point."
France will move quickly to introduce the tax, Associated Press reported. It is expected to pass through French parliament, where President Emmanuel Macron's party has a majority, in the coming months.
France could become the first European country to put in place such a tax, but Britain could be close behind. In October, UK Chancellor Philip Hammond said the UK would tax 2% of British user-generated revenue in a new "Digital Services tax."
Read more: Here's how the UK plans to seize $2 billion in tax from firms like Amazon, Facebook, and Google
Hammond estimated that this would bring in up to £400 million ($510 million) a year for the Treasury, starting in 2020. The British government has just concluded a consultation on the proposals.
Combined, the UK and French tax will raise just under $1.1 billion from mainly US tech firms.
The UK said its Digital Services tax is an "interim measure" while the EU tries to construct its own international tech giant tax. In late November 2018, a proposed EU digital tax was blocked by Ireland, Sweden, Denmark, and Germany.
Le Maire has been vocal about pushing through EU legislation, and told French newspaper le Journal de Dimanche in January that a European agreement is now "within reach."
He told Europe 1 this week that he is optimistic other countries will follow France's lead. "This tax we're making at a national level. I hope that next, it will become an international tax, and that all developed countries could adopt the idea," he said.