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French Associations Oppose 'Google Tax'

by Ulrika Lomas,, Brussels

24 November 2010

Amendments to France’s 2011 finance bill, put forward by French Senator Philippe Marini, proposing a 1% tax on the purchase of online advertising space, and a 0.5% tax on online commercial sales from January 1, 2011, have been met with fierce criticism from professional associations.

France’s Interactive Advertising Bureau, IAB France, which represents the online publicity sector, warned that the measure would weigh heavily on small advertisers, such as small- and medium-sized companies (SMEs) and very small companies in France, and would lead to an exodus of larger internet stakeholders from France. IAB France also pointed out that online publicity serves to generate significant savings for individual households, and to therefore benefit purchasing power.

Echoing views expressed by the IAB, the French union of advertisers (l’Union des annonceurs) stressed that this so-called ‘Google tax’ was an inappropriate and counter-productive response to the actual objective, namely to recover lost fiscal revenues from internet giants such as Google, Microsoft, eBay and Amazon. According to Marini, these operators are strategically located in European countries including Ireland and Luxembourg in order to benefit from various fiscal advantages.

However, the union underlined the fact that rather than taxing these operators, the measure actually targets their French clients, often SMEs, who are already taxed in France. Yet it is these companies, the union added, who support, by their advertising expenditure, both media development and free internet services. The union urged the Senate to reject the proposed tax and to participate instead in a discussion involving all online advertising stakeholders.

Presented at the beginning of the year to the French Culture Ministry, the Zelnik Commission’s report entitled “Creation and Internet,” proposed the introduction of such a levy to finance the development of cultural services over the internet. According to Marini, the tax would serve to generate in the region of EUR20m.

France’s 2011 finance bill is currently being examined by the Senate.

TAGS: tax | commerce | internet | e-commerce | France

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