The tax man is coming for Big Tech.
That's the case in France at least, with French Economy Minister Bruno Le Maire saying that he plans to raise taxes on Alphabet (GOOGL - Get Report) , Apple (AAPL - Get Report) , Facebook (FB - Get Report) and Amazon (AMZN - Get Report) in the immediate future -- as of January 2019.
Speaking at a press conference on Monday, Le Maire said that the tax will be initiated on January 1 "whatever happens" and estimated that it will bring in €500m, or about $567 million. The tax is being referred to as the "GAFA tax" for Google, Apple, Facebook and Amazon
France's tax would pre-empt a prospective EU-wide tax that member states have been negotiating for the better part of a year. States had sought to create a comprehensive tax on tech multinationals that could be applied by all 28 member states, and Le Maire had indicated previously that he would hold off on levying a tax until March 2019 to allow time for negotiations to proceed. On Monday, however, Le Maire said that France would press ahead alone with the tax.
In March 2018, the European Commission published a proposal for a 3% tax on tech giants with global revenues north of €750m ($850 million USD) per year, and EU revenue above €50m (about $57 million). But with disagreements by some member states, including Ireland and the Netherlands, on how to move forward with such a tax, the process has stalled.
In the meantime, Britain and now France are pushing tax proposals of their own. In October, British Chancellor Philip Hammond announced that the UK will introduce a "digital services tax" in 2020, narrowly targeted at highly profitable tech firms that do business in the UK, unless a consensus is reached by intergovernmental groups on how to approach a tech tax. The Chancellor's office has suggested that the tax would generate at least 400 million pounds ($505 million) per year. With a Brexit deal pending, however, it's possible that the UK's tax proposal could fall by the wayside.
Shifting international tax policy, both within in the U.S. and Europe, could saddle tech companies with higher tax bills in the next few years -- in addition to any penalties that companies could face because of GDPR provisions.
"Because of President Trump's international commercial protective nationalistic battle, all other large economies are insisting that the tech giants will pay their fair share of tax," Radu Tunaru, a professor of finance at the University of Kent, told TheStreet in November.
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