The “Gafa Tax” Validated by the Senate to Impose on the Digital Giants

The Senate examines Tuesday and Wednesday at first reading the proposed GAFA tax on the digital giants,

The GAFA tax that must target the digital giants such as Facebook and Google has been validated by the Senate Wednesday 22nd May, 2019. Members and senators still have to agree.

The majority Senate on the right has voted by show of hands, on the night of Tuesday, May 21 to Wednesday, May 22, 2019, at first reading, the introduction of a tax on digital giants led by Bruno Le Maire, writing in the text its temporary nature.

The ” Gafa tax” (acronym for Google, Amazon, Facebook and Apple), already adopted in the National Assembly , should make France one of the pioneers in the field, despite the opposition of the United States.

The upper house adopted the entire text, which also includes a section on corporation tax, with 181 votes in favor and 4 against and 158 abstentions.

Deputies and senators will now try to agree on a joint version in Joint Joint Commission, otherwise a new reading will be necessary.

Towards consensus at the OECD level?

The “French Gafa tax” is largely inspired by a European project that did not succeed because of the reluctance of Ireland, Sweden, Denmark and Finland.

For the Minister of the Economy, this unilateral solution must serve as a “lever” in international negotiations, pending completion of the work of the Organization for Economic Co-operation and Development (OECD).

The Minister has made a new commitment to “withdraw it immediately as soon as there is consensus at the OECD level”.

He also said, in response to the concerns expressed by the rapporteur of the Finance Committee Alberic Montgolfier (LR), “that there is no reason to worry about the legal strength” of the device.

More than 750 million euros in turnover

In concrete terms, the tax must concern digital activities that “create value thanks to French Internet users”.

It targets companies that make a turnover on their digital activities of over 750 million euros worldwide, including 25 million euros that can be attached to users located in France. The idea is to impose 3% of the turnover achieved in France on targeted advertising online, the sale of data for advertising purposes and the linking of Internet users by the platforms.

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

Criticism of a “poorly prepared” device, the LR group nevertheless chose to support “the principle of this tax, in the only hope that it allows to accelerate the negotiations within the OECD” . It has also received the support of centrists and Independents.

For the left, “the tax goes in the right direction, but remains largely insufficient”. Pascal Savoldelli (communist-majority ECRC) mocked the acronym for the “Great Annual Government Display”.

Unilateral disarmament

Senators wanted to “secure” the device by strengthening the protection of personal data of French users and taking into account the double taxation that could hit companies already subject to corporate tax in France.

Above all, they enshrined in the law the “temporary” nature of the tax, providing for its extinction on 1 January 2022. A “demarcation” in time regretted by the left as by the government. “It’s unilateral disarmament,” the minister said.

The Senate also adopted amendments specifying the scope of the tax and its technical details.

The GAFA tax, whose introduction was announced by Emmanuel Macron in December, in the midst of the crisis of “yellow vests”, must help finance the 10 billion euros of emergency economic and social measures .

Same objective for the second part of the bill that affects the trajectory of corporate tax cuts for 2019 for large corporations.

The Senate narrowly adopted it, by 163 votes to 159, the right regretting that the measure comes back “on a commitment of the government”.

Bruno Le Maire assured that this change for 2019 does not question the commitment of the government that “the tax rate will be 25% for all companies without exception in 2022”.

“The corporate tax will drop for all companies in 2020,” then committed Secretary of State Cédric O.

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