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France May Backtrack On Digital Tax

by Ulrika Lomas,, Brussels

18 July 2013

France's National Digital Council (le Conseil National du Numérique – CNN) will advise against the introduction of a specific tax on the digital sector, in a report due to be presented to the Government on July 24, according to Council president Benoît Thieulin.

France's CNN was tasked back in February 2013 with examining the idea of introducing a digital tax in France, targeting US Internet giants who currently pay very little in tax in France by exploiting tax optimization loopholes.

Ahead of publication of the CNN's report, Thieulin made clear that a national levy imposed on the sector would merely serve to penalize consumers and French companies, without actually meeting its intended target. Furthermore, a national digital tax would prove dangerous for the attractiveness and competitiveness of France as a location, and would not address the key problem of multinational tax avoidance, Thieulin warned. There are simply more disadvantages than advantages to such a levy, he emphasized.

Thieulin explained that the Council will instead urge the Government to spearhead an initiative at European level, encouraging a European approach to the problem, if necessary within the framework of enhanced cooperation.

In its report, the French Digital Council analysed the pros and cons of introducing various types of digital tax in France, including the idea of a "per click" fee, a tax on online advertising, an e-commerce tax, and a levy imposed on all Internet connected devices.

The Council did not, however, study the idea of a tax on personal data as advocated by state councilor Pierre Collin and Government auditor Nicolas Colin at the beginning of the year. Their suggestion was to levy a tax on the amount of personal information collected by Internet companies such as Google, used to direct personalized advertising and other services to users.

Given that French Digital Economy Minister Fleur Pellerin announced her intention earlier this year to include plans for an Internet tax in the country's 2014 Budget, and in view of the clamor for action by both the music and press industry, the report's recommendations are likely to prove highly unpopular.

TAGS: tax | tax avoidance | mining | commerce | audit | e-commerce | France | services

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