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France approves tax on tech firms

France has passed a digital services tax despite threats of retaliation by the US.

The new tax law, which the French senate approved on Thursday, is opposed by the US, which argues that it unfairly targets American tech giants.

The 3% tax will be levied on sales generated in France by multinational firms like Google and Facebook.

The French government has argued that such firms headquartered outside the country pay little or no tax.

The US administration has ordered an inquiry into the move – which could result in retaliatory tariffs.

Under the new law, any digital company with revenue of more than 850 million Dollars – of which at least 25 million is generated in France – would be subject to the levy.

It will be retroactively applied from early 2019, and is expected to raise about 400 million Euros this year.

At present, the firms are able to pay little or no corporate tax in countries where they do not have a large physical presence. They declare most of their profits where they are headquartered.

About thirty – mostly American companies – will pay it. Chinese, German, Spanish and British firms will also be affected.

 

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