French Digital Tax Bill Passes Lower House Parliament Vote

Digital Tax Bill
An illuminated Google logo is seen inside an office building in Zurich, Switzerland (Photo: Reuters)

France's controversial new proposal to tax tech giants has now moved up the ladder as the country's lower parliament has voted in favor of it. The digital tax bill passed the country's lower parliament without any modifications, which means that it may soon influence the rest of Europe to pass EU-wide digital tax legislation. With the bill now approved by the lower House, it will now move to the upper house of the French parliament.

Last month, France had announced that it was planning to pass new tax legislation that would add a 3 percent tax to digital businesses based on their domestic revenue. France already generated millions of dollars from big tech companies, but they now want to tax the revenue these companies generate domestically. Article 2 of the proposed digital tax bill also postpones corporate tax reductions for tech companies that generate more than US$280 million in sales.

The country's economy minister Bruno Le Maire has been lobbying the new legislation to other European countries, claiming that it would prevent these companies from changing their corporate structure to lower their tax rates. However, for this to happen, the EU must vote unanimously with every single member on board. This may prove to be very difficult given that several EU countries are home to a number of regional headquarters for a number of tech giants. An effort to pass similar legislation in the EU last year had failed due to objection from Germany and Ireland.  

The proposed tax will be targeting two specific digital business categories, namely marketplace firms and advertising firms. The bill also only includes companies that generate more than US$845 million in global revenues and at least US$28 million in revenues in France.

Companies that fall into these categories include Amazon, Uber, and Airbnb under the marketplace category. Facebook, Google, and French tech firm Criteo SA will fall under the advertising category. All in all, the new tax legislation will be affecting around 30 major tech companies, most of which are from the United States.

According to the bill's proponents, they are hoping to generate around US$565 million each year if the bill passes. Le Maire also added during an interview that the new bill is simply a response to the recent economic revolution. Le Maire reiterated that France and the rest of the EU should act accordingly as they face an ever-changing business atmosphere. The economic minister hopes other EU countries will follow suit and change their attitudes towards the proposal soon. 

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