Taxing the Digital Economy – France leads the charge

This Newsletter has reported on the plans of European countries to apply taxes to the social media giants’ ad revenues. Last year Spain, Germany and the European Commission withdrew their plans to tax these companies, but France has gone ahead despite threats from President Trump to retaliate. The digital services tax approved by the National Assembly last week imposes a 3% levy on sales by global tech companies providing services in France. If the companies have no profits, they will still pay the tax. The argument is that the 80-year-old global protocols that says that tax is only due in a company’s home country are outdated in the digital era. France also argues that Tech companies have consistently exploited loopholes that allow them to book profits arising from their intellectual property and other intangible assets somewhere other than where they earn the revenue. Instead the French government reasons they should pay tax where the sales are made

In addition, France’s National Assembly approved a draft bill on 5 July which directs social media companies such as Facebook and Twitter to take down any hateful content from their platform within 24 hours. According to the draft law, companies will have to put in place tools to alert users about “clearly illicit” content related to race, gender, religion, sexual orientation or disability. The bill has now passed to the Senate. France’s broadcasting regulator CSA (Conseil Supérieur de l’Audiovisuel) will be responsible for imposing the sanctions. A separate prosecutor’s office will be set up to apply the law.