France’s National Assembly on Thursday approved a digital tax bill known as the GAFA Tax, an acronym for Google, Apple, Facebook and Amazon, that will charge the companies a 3 percent tax on digital revenue earned in France.
The tax has been defended as a targeted approach, only applying to businesses with “global digital revenues of more than 750 million euros and French digital revenues of more than 25 million euros.” The goal of the tax is to enable a reduction on taxation of startups to help encourage their growth, as well as to support public services, schools, nurseries, and hospitals.
This is a national tax, but several ministers including the Minister of Economy and Finance, have expressed the intention to “redefine tax rules at the international level as well,” with the goal of creating an international agreement to eventually replace the national tax.
Once signed by President Emmanuel Macron, the bill will become law and will be retroactively applied from January 2019.
France is the first major economy to adopt a tax on these tech giants. As of April, there were six other EU member countries considering similar approaches.