The revenues of US big tech companies have been shockingly high and one can only imagine the amount of cash that could be generated for a government if there was just a small tax added to services. Well, France just announced that The tax will apply to French revenues for these big three names, only 3 percent. The EU-backed effort to pass the 3 percent failed one year ago but this time it has been adopted.
According to an article in CNBC, Elizabeth Schulze, March 6, the tax would apply to roughly 30 major companies and most are in fact, US based. France`s Finance Minister Bruno Le Maire has estimated that the tax will raise approximately 500 million euros ($565 million) per year. The next step, after this small amount of tax revenue that will be produced in France, will be to introduce a EU-wide tax for all major digital companies. Last year the EU-wide tax failed amid concerns that the US would retaliate with trade restrictions.
The Organization for Economic Cooperation and Development (OECD), is currently studying the 3 percent tax and will have a conclusion in 2020. Right now, Spain, the UK, and Germany are all working on their own versions of tax changes to be applied to tech companies. The French tax would apply to companies that generate worldwide revenues on digital services of at least 750 million euros ($847 million), with a small slice of about 25 million from France.
Classiarius Viewpoint – this tax issue could in fact explode in the future as France and other countries in the EU are looking for ways to fill the holes in their overstretched budgets. This will be a hot issue in the coming years as global companies are now being watched in Europe as the view is that these companies, according to French leadership, benefit from lower tax rates than European companies.