PublishedMarch 6, 2019

French digital tax proposal risks harming French startups, investments and consumers prices

Brussels, BELGIUM — Today the French government announced its proposal for a national digital service tax. If approved by the French Parliament, the law could enter into force retroactively from January 1, 2019. The proposed 3% turnover tax is targeted at companies with certain digital business models and revenues above €750m globally and €25m in France. Parts of the tax will likely be passed on to French firms that use online services and ultimately increase consumer prices in France.

The proposal is very similar to a French-supported EU Digital Services Tax which EU Member States have not adopted. One of the main arguments for the tax is that so-called digital companies pay less tax than traditional firms, a claim that has been widely dismissed by industry and economists.

Broader and more ambitious tax reform, covering all types of multinational companies, involving more than 120 countries, is taking shape at the OECD. The OECD plans to present a global solution already next year. The Computer & Communications Industry Association will today submit its comments to the OECD public consultation in support of a global solution.

The following can be attributed to CCIA Vice President and Head of office Christian Borggreen:

“We welcome and support the OECD’s efforts to achieve a consensus for ambitious, global tax reform next year. So-called digital companies are, contrary to claims, not under-taxed and they should not be arbitrarily targeted.”

“We are concerned that the French digital tax proposal would end up harming French startups, investments and increase consumer prices. France should lead efforts to achieve international tax reform — rather than taking unilateral actions that risk undermining global efforts.”

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