Tuesday, 25 January, 2022

Gafa tax: first green light from deputies in committee

The deputies gave their green light on Wednesday April 3 in committee to the bill to tax the digital giants, after some alterations, Bruno Le Maire defending an “essential” tax which will serve as “leverage” in international negotiations. Present in the Finance Committee since the start of the examination on Tuesday, the Minister of the Economy saw in this text, which will be examined in the hemicycle from Monday, “an element” which “should lead us to build a new taxation “of the twenty-first century.

The Gafa tax (acronym for Google, Amazon, Facebook and Apple) must concern companies that make a turnover on their digital activities of 750 million euros in the world and more than 25 million euros in France. The idea is to impose them at the level of 3% of the turnover achieved in France on online advertising, the sale to third parties of personal data and “intermediation” (linking, through platforms, between companies and customers).

The tax is similar to a European project that failed, due to the reluctance of four countries (Ireland, Sweden, Denmark and Finland). The introduction of the French tax will give “a leverage effect” at the international level, assured Bruno Le Maire, adding that “when France shows its will, things move”.

While some elected officials, including LR, worried about a repercussion on consumers, he saw a “bad argument”, arguing in particular that the advertisements viewed “willy-nilly” on smartphones do not require any payment. He also rejected the idea that a national tax is useless or could harm French startups.

Provisional character

According to rapporteur Joël Giraud (LREM), the tax, announced in December in response to the “yellow vests” movement, should bring in 400 million euros in 2019, then 650 million in 2020-2022. Some elected officials, like Eric Coquerel (LFI) considered the tax “too little ambitious”, the Communist Fabien Roussel criticizing his plate “not very large” comparable to a “saucer” or even “a cardboard coaster “.

Mr. Le Maire replied that his field should be “coherent” and concern digital activities that “create value thanks to French Internet users” without these companies paying traditional taxes. MEPs adopted several amendments which “consolidate the legal bases” of the tax, according to the rapporteur.

They detailed the excluded services, such as certain financial services or for the supply of digital content, such as Netflix. They also provided for automatic taxation in the event of a total lack of response from companies, or removed the possibility that the tax could be deductible from the “Youtube” tax (video tax imposed on platforms), the rapporteur explaining that its return is assigned to the National Cinema Center (CNC).

To mark the provisional nature of the tax pending an international agreement, they also planned an annual report on the progress of negotiations.

In addition, several LR elected officials tried in vain to remove Article 2, which provides that large companies will continue to be taxed at 33.33% on their profits in 2019 via corporate tax, denouncing a “turnaround” government and citing the “need for fiscal stability”. Bruno Le Maire reaffirmed that the CIT should be gradually reduced to 25% by 2022.

(With AFP)