Gafa tax: the Senate gives the green light

The right-wing majority Senate voted by show of hands, on the night of Tuesday to Wednesday, May 22, at first reading, the establishment of a tax on digital giants carried by Bruno Le Maire, inscribing in the text its character temporary. The “Gafa tax” (acronym for Google, Amazon, Facebook and Apple), already adopted by the National Assembly, should make France one of the pioneer countries in this area, despite opposition from the United States.

The upper house adopted the entire text, which also includes a section on corporate tax, by 181 votes in favor and 4 against and 158 abstentions. Deputies and senators will now try to agree on a common version in a joint committee, otherwise a new reading will be necessary.

The “French Gafa tax” is largely inspired by a European project that failed due to reluctance from Ireland, Sweden, Denmark and Finland. For the Minister of the Economy, this unilateral solution should serve as a “lever” in international negotiations, pending the outcome of the work of the Organization for Economic Co-operation and Development (OECD).

The minister again pledged to “withdraw it immediately as soon as there is a consensus at OECD level”. He also considered, in response to the concerns expressed by the rapporteur of the Finance Committee Albéric de Montgolfier (LR), “that there is no reason to worry about the legal soundness” of the device.

About thirty groups concerned

Concretely, the tax must concern digital activities that “create value thanks to French Internet users”. It targets companies that generate revenue from their digital activities of more than 750 million euros worldwide, including 25 million euros that can be linked to users located in France. The idea is to impose them at the level of 3% of the turnover achieved in France on targeted online advertising, the sale of data for advertising purposes and the linking of Internet users through platforms.

It should apply to around thirty groups like Meetic, Amazon, Airbnb, Instagram or even the French Criteo, and bring in 400 million euros in 2019, then 650 million in 2020.

Criticism of an “ill-prepared” device, the LR group has nevertheless chosen to support “the principle of this tax, in the sole hope that it will accelerate negotiations within the OECD” . It also received support from the centrists and the Independents. For the left, “the tax is going in the right direction, but remains largely insufficient”. Pascal Savoldelli (predominantly Communist CRCE) mocked the acronym for “Grand Annuel Government Display”.

“Temporary” character

The senators wished to “secure” the system by strengthening the protection of the personal data of French users and by taking into account the double taxation which could affect companies already subject to corporate tax in France.

Above all, they enshrined in law the “temporary” nature of the tax, providing for its extinction on January 1, 2022. A “demarcation” in time regretted by the left as by the government. “It is unilateral disarmament,” said the minister. The Senate also adopted amendments specifying the scope of the tax and its technical details.

The tax, the introduction of which was announced by Emmanuel Macron in December, in the midst of the “yellow vests” crisis, should help finance the 10 billion euros of emergency economic and social measures. The same objective for the second part of the bill which changes the trajectory of corporate tax cuts for 2019 for large companies.

The Senate narrowly adopted it, by 163 votes against 159, the right regretting that the measure goes back “on a commitment of the government”. Mr. Le Maire assured that this shift for 2019 did not call into question the government’s commitment that “the tax rate will be 25% for all companies without exception in 2022”.

“Corporate tax will drop for all companies in 2020”, then committed the Secretary of State for Digital Cédric O.

(with AFP)