Friday, 14 January, 2022

After his failure in Brussels, the Mayor releases his Franco-French Gafa tax

A bitter failure. After eighteen months of discussions and negotiations, Bruno Le Maire, the Minister of the Economy, admitted that there will be no European agreement on the creation of a tax on digital giants. A disagreement that will be sealed on March 12, during a meeting of finance ministers in Brussels, linked in particular to the waltz-hesitation of the Germans who first supported the initiative before abandoning the French in the open. And the many very offensive speeches of the French minister will have no effect. In Sofia, during an Ecofin in May 2018, he expressed his “cold anger” to his colleagues: “If you want to go to the European elections with the message ‘we talked a lot, debated a lot, but made no decision’: good luck !”. Here we are: a little over two months before the Europeans, the 27 have revealed their powerlessness on the tax subject.

A 3% tax on large digital companies

So Bruno Le Maire will fire his last cartridge, on March 6, by presenting his bill to the Council of Ministers creating a French tax on digital companies. It is following in the footsteps of Spain and the United Kingdom, which have announced similar plans. It essentially takes up the architecture of the European directive which was the subject of fruitless discussions. The turnover of companies with global digital activity of more than 750 million euros and 25 million in France will be taxed at 3%. A levy that should bring in 500 million euros this year, targeting advertising revenue from Google and Facebook and digital platforms like Amazon, which connect customers and producers. Conversely, groups like Darty which sell their products on the Internet will not be affected, according to the Minister of the Economy. And thanks to the tax threshold, our start-ups would be spared. Only one French group would be affected: Criteo.

Taxing turnover is not efficient

Faced with the massive relocation of tech giants to tax havens, the French tax has the merit of existing. But many experts criticize it: “It is simplistic, applying to turnover. It risks taxing certain companies twice, on profits and on activity,” said Vincent Renoux, lawyer at the firm Stehlin & Associates

and subject specialist. However, the Minister of the Economy clarified that companies will be able to deduct their corporate tax already paid from this tax, which will reduce the bill by a third. “It is a strong political act. But taxing companies on turnover is not economically efficient, admits LREM deputy Bénédicte Peyrol, author of a very detailed report on the subject. This measure must be transitory and we have to set a deadline “.

This very imperfect tax aims to put pressure on the Gafa while awaiting the progress of the great negotiation on digital taxation, launched at the global level by the OECD. “For six months the dynamic has been really positive, especially on the side of the United States,” said Pascal Saint-Amans, head of the OECD’s tax policy center. Secretary of State for the Treasury Steven Mnuchin has indeed advanced the objective of an agreement on a global digital tax at the end of 2019. The United States is now in favor of a change in the traditional rules of taxation to tax value represented by consumers, in this case the users of the tech giants. “The principles are established. It remains to implement them which will be long and complex”, warns Vincent Renoux. The risk is that this international fiscal big bang, involving 127 countries with very divergent interests, will take much longer than expected. And that France keep this tax, a worst case to (really) tax the generous profits of the digital giants.


European Commission