France unveils plan to tax Internet giants

French Economy and Finance Minister Bruno Le Maire has proposed a bill to have big-hitting Internet companies pay a tax of three percent on their digital sales in France. (AFP)
Updated 06 March 2019
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France unveils plan to tax Internet giants

  • The 3 percent tax will apply to digital companies that have global revenues of over €750 million ($848 million), and French revenue over €25 million
  • France decided to implement the digital tax after a similar proposal at the European Union level failed to get unanimous support from member states

PARIS: The French government on Wednesday unveiled plans to slap a 3 percent tax on the French revenues of Internet giants like Google, Amazon and Facebook.
The bill is an attempt to get around tax avoidance measures by multinationals, which pay most of their taxes in the EU country they are based in — often at very low rates. That effectively means the companies pay next to no tax in countries where they have large operations.
The tax will apply to digital companies that have global revenues of over €750 million ($848 million), and French revenue over €25 million. That will help protect startups, Finance Minister Bruno Le Maire said in a news conference.
About 30 companies, mostly based from the U.S, but also from China and Europe, will be affected.
France is set to be the first European country to implement such a tax as the bill presented Wednesday in a cabinet meeting is likely to pass in the coming months in parliament, where French President Emmanuel Macron’s party has a majority.
Le Maire estimated the tax will raise about €500 million ($566 million) a year this year but that should increase “quickly.”
He said the tax will not affect companies directly selling their own products online. It will mostly affect companies that use consumers’ data to sell online advertising. It will also apply to online services companies like Airbnb and Uber.
“This is about justice,” Le Maire said. “These digital giants use our personal data, make huge profits out of these data ... then transfer the money somewhere else without paying their fair amount of taxes.”
Le Maire quoted figures from the European Commission, the EU executive body, showing that the major digital tech companies pay on average 14 percentage points less tax than other European companies.
France decided to implement the digital tax after a similar proposal at the European Union level failed to get unanimous support from member states.
Le Maire said he would now push for an international deal by the end of the year among the countries of the Organization for Economic Cooperation and Development, a Paris-based forum made up mostly of developed nations.
The Computer and Communications Industry Association criticized the French measure, saying it would ultimately lead to higher costs for French firms and consumers.
“So-called digital companies are, contrary to claims, not under-taxed and they should not be arbitrarily targeted,” said CCIA Europe’s vice president, Christian Borggreen.


In nod to debt concerns, China Belt and Road summit to urge sustainable financing

Updated 21 April 2019
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In nod to debt concerns, China Belt and Road summit to urge sustainable financing

  • The Belt and Road Initiative envisions rebuilding the old Silk Road to connect China with Asia, Europe and beyond
  • But the initiative has proved controversial in many Western capitals, particularly Washington

SHANGHAI: World leaders meeting in Beijing this week for a summit on China’s Belt and Road initiative will agree to project financing that respects global debt goals and promotes green growth, according to a draft communique seen by Reuters.
The Belt and Road Initiative is a key policy of President Xi Jinping and envisions rebuilding the old Silk Road to connect China with Asia, Europe and beyond with massive infrastructure spending.
But it has proved controversial in many Western capitals, particularly Washington, which views it as merely a means to spread Chinese influence abroad and saddle countries with unsustainable debt through nontransparent projects.
The United States has been particularly critical of Italy’s decision to sign up to the plan last month, the first for a G7 nation.
In an apparent nod to these concerns, the communique reiterates promises reached at the last summit in 2017 for sustainable financing — but adds a line on debt, which was not included the last time.
“We support collaboration among national and international financial institutions to provide diversified and sustainable financial supports for projects,” the draft communique reads.
“We encourage local currency financing, mutual establishment of financial institutions, and a greater role of development finance in line with respective national priorities, laws, regulations and international commitments, and the agreed principles by the UNGA on debt sustainability,” it added, referring to the United Nations General Assembly.
The word “green” appears in the draft seven times. It was not mentioned once in the summit communique from two years ago.
“We underline the importance of promoting green development,” the draft reads. “We encourage the development of green finance including the issuance of green bonds as well as development of green technology.”
The Chinese government’s top diplomat, Wang Yi, said on Friday that the Belt and Road project is not a “geopolitical tool” or a debt crisis for participating nations, but Beijing welcomes constructive suggestions on how to address concerns over the initiative.
A total of 37 foreign leaders are due to attend the April 25-27 summit, though the United States is only sending lower-level representatives, reflecting its unease over the scheme.
The number of foreign leaders at the April 25-27 summit is up from 29 last time, mainly from China’s closest allies like Pakistan and Russia but also Italy, Switzerland and Austria.
China has repeatedly said Belt and Road is for the benefit of the whole world, and that it is committed to upholding globally accepted norms in ensuring projects are transparent and win-win for all parties.
“We emphasize the importance of the rule of law and equal opportunities for all,” the draft reads.