France will impose digital tax regardless of whether the rest of the world proceeds with a deal on an international levy, according to this article by Euractiv.
France will impose a digital tax on corporate giant tech companies. According to Finance Economics Minister, Bruno le Maire, large tech companies like Amazon and Google have largely and disproportionately profited from the ease of doing business online during the COVID-19 pandemic and amid social distancing protocol and practices, and the French, like many other EU nations, feel that they must do something in order to stimulate their local economy in what is expected to be their upcoming deep recession.
Washington may fight back on digital tax
There has been a big pushback on the implementation of a digital tax, which would largely affect digital corporate giants like Google, which records an annual global revenue of over $160 billion (over 145 billion Euros). Washington, considering that many of these tech giants are US based, has threatened to fight back with their own trade tariffs, also claiming that France unfairly targets US digital companies.
Many EU nations are moving forward with digital tax implementation despite setbacks
While digital tax implementation at a uniformed rate across European nations arms to be a long time coming, France is not alone in wanting to move forward with its implementation. Countries like Italy, Britain and Spain either have already implemented digital tax or plan on doing so in the near future. However due to opposition from countries like Ireland, progress towards an EU wide digital tax seems to be stalled at the moment. In other nations, like the Czech Republic for example, Finance Minister Alena Schillerova has said that she may actually delay the implementation of a digital tax until next year and lower the rate, from the currently proposed 7% to 5%.
France will impose digital tax, whether or not international tax is implemented.
According to Euractiv, “Nearly 140 countries from the Organisation for Economic Cooperation and Development (OECD) are negotiating the first major rewriting of tax rules in more than a generation, to take better account of the rise of big tech companies such as Amazon, Facebook, Apple and Google that often book profit in low-tax countries.”
“Never has a digital tax been more legitimate and more necessary,” Finance Minister Bruno Le Maire told journalists on a conference call on May 13th. “In any case, France will apply as it has always indicated a tax on digital giants in 2020 either in an international form if there is a deal or in a national form if there is no deal.” Initially, in January, the government of France had offered to suspend its current digital tax on tech companies until the end of 2020, while an international tax deal was being negotiated. However, due to the circumstances surrounding the coronavirus outbreak, things have changed, with finance ministries more focused now than ever before, on saving their local economies.
EU seeks a better managed digital space, including digital tax.
Considering what seems to be an integration of the US and EU economies with the digital sphere, the European Union has sought to introduce regulation to achieve a level playing field and protect both European consumers and businesses in this new digital world. With legislation like the GDPR controlling the flow of information across borders and protecting consumer data, many legislative authorities do believe that a digital tax is the absolutely necessary next step. As digital corporate giants, like Amazon and Google with little to no physical presence in Europe have largely escaped what many would consider fair taxation, as a result of their predominantly online operational presence, governments across the EU believe that it is time to restructure and level the playing field. While there are many initiatives which are more focused on investment and education, there is a push now from legislators to enforce digital tax, particularly with the current need for income and to stimulate local economies impacted by the effects of COVID-19. Ultimately, the result of this will be a more managed digital space where online companies are not benefiting from a disproportionate advantage.