Tech

Paris, Berlin to propose new tech tax to save face

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France and Germany will Tuesday propose a new advertising tax for tech giants like Facebook and Google in another desperate attempt to reach a compromise at EU level.

The new proposal — obtained by POLITICO — effectively ends the European Commissions proposed “digital services tax” (DST), which EU finance ministers were expected to vote down Tuesday in Brussels at this months ECOFIN meeting.

The new Franco-German draft levy would target tech companies at a rate of 3 percent “on a tax base referring to advertisement,” according to the proposal, which Paris and Berlin completed late on Monday night following talks at the G20 summit in Buenos Aires over the weekend.

The document makes no reference to taxing company revenues, which was a central concern to countries like Denmark with regard to the DST.

Frances Bruno Le Maire is set to unveil the new proposal to his peers together with Germanys Olaf Scholz and urge them to agree on it by March 2019 “at the latest.”

The levy would “enter into force on January 1, 2021, if no international solution has been agreed upon,” the proposal said. It would then “expire by 2025.”

EU tax initiatives require unanimity before they can become law, and its unclear whether the new proposal will satisfy Denmark, Finland, Ireland and Sweden, which rejected the DST for “political reasons.”

“We know some member states have reservations, these have been made clear in recent months,” an official said. “But we believe it is essential to find an agreement that is both fair and effective and responds to citizens concerns.”

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