The Gafa tax arrives in the Senate on Tuesday

The Senate examines Tuesday, May 21 and Wednesday at first reading the proposed tax on digital giants, defended by Bruno Le Maire, which raises questions at the Luxembourg Palace with a right-wing majority. The “Gafa tax” (acronym for Google, Amazon, Facebook and Apple), presented by the Minister of the Economy Bruno Le Maire as being in “the honor of France” after the failure of a European initiative, has was adopted at first reading in the National Assembly.

It must make France one of the pioneer countries in this area, despite the opposition of the United States, but “the government takes a lot of risks for a billboard”, estimates the general rapporteur of the Committee of Finance Alberic de Montgolfier (LR). The tax that France wishes to introduce is largely inspired by a European project which failed due to the reluctance of Ireland, Sweden, Denmark and Finland.

For the minister, it will serve as a “lever” in international negotiations. A temporary unilateral solution, therefore, pending the outcome of the work of the Organization for Economic Cooperation and Development (OECD). 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 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 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.

“Lots of questions”

For M. de Montgolfier, “everything seems very simple, but everything is complicated”. Certainly, “politically, there is no reason to oppose taxes applying to companies that pay little tax in France”. But the general rapporteur points to “many questions” and a unilateral initiative “very risky on the legal level”. “Does it comply with international tax law? With European treaties?” He asks? And to warn against the risk that France will one day be forced to repay the sums collected.

The rapporteur also wonders about the base retained, the turnover, rather than the profit, and on possible negative effects for the development of French companies which would be bought by larger groups.

For Alberic de Montgolfier, “the right level” for such taxation is the OECD. But if it were to be set up unilaterally by France “for lack of anything better”, “it would have to be made legally secure”, he affirms. A position shared by the centrist group, The Republicans have not yet spoken officially.

Asic (Association of Community Internet Services) welcomed in a press release the changes made in committee aimed at “securing a little” the device. The committee notably reaffirmed the “temporary” nature of the tax, providing for its extinction on January 1, 2022.

In front of the deputies, Mr. Le Maire had promised not to relax his efforts “until the OECD comes to an agreement”, deeming this “possible from 2020”. France will then “naturally withdraw its national tax”, he said. 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, a point that the senatorial majority may have difficulty swallowing. “We are going back on a government commitment”, underlines Mr. de Montgolfier. Centrist Senator Vincent Delahaye tabled an amendment to delete this article.

(With AFP)