Internet giants threatened with forced disclosure in France

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France’s former digital affairs minister wants to force internet giants like Amazon, Alphabet, Microsoft, Facebook and Apple to reveal how much profit they make in France, saying the companies are understating their French activities to a vast extent.

Mounir Mahjoubi, who served in President Emmanuel Macron’s administration until March, said he may file an amendment requiring the disclosure to the budget bill that lawmakers will begin discussing Friday. Otherwise, the government’s new digital tax may end up collecting only half the money that it should, he said. The administration is due to publish its first estimate of how much the levy will raise at the end of the year.

“I want lawmakers to have the tools to pressure the government when it is negotiating with other countries for fair taxation at a global level,” Mahjoubi said in an interview. “It’s parliament’s role to help the government to improve their legislation. So I am keeping open the possibility of filing an amendment to force the companies to be transparent here.”

The French state started imposing a 3 percent levy on French revenue for digital companies in July. The government never disclosed the list of companies affected but said it estimated it could raise 400 million euros ($440 million) this year and close to 650 million euros in 2022. The tax has created a major dispute with the U.S., which opened a Section 301 investigation into the tax.

Macron’s former minister said that by his calculations the French state could be raising 1 billion euros a year. Mahjoubi, now a lawmaker in the National Assembly, based his calculation on the 2018 public data ranging from internet traffic to corporate filings. The five leading internet companies paid 130 million euros in total business taxes for 2018, he said.

A spokesman for the Finance Ministry, which is in talks with U.S. authorities over the tax, said its priority is to support the Organisation for Economic Cooperation and Development’s efforts to create an international system for capturing the profits from online activity but it also pays attention to lawmakers’ work. Mahroubi’s departure from his ministerial post was amicable for both sides.

Global effort

The new digital affairs minister’s office declined to comment. The former minister’s push comes after Google agreed to pay 965 million euros ($1.1 billion) to end two French tax investigations after years of outrage in Europe over the small amount of tax it pays.

France has taken the lead in Europe with a tax on tech firms that generate at least 750 million euros in global annual revenue from digital activities. Mahjoubi is calling for the finance and budget ministry to show lawmakers its full assessment of those digital companies’ business in France.

France said its digital tax is temporary until the OECD manages to broker a global agreement for more effectively taxing internet companies that use complicated structures to shift earnings to low-tax jurisdictions.

— Helene Fouquet
Bloomberg News

Helene Fouquet
Bloomberg News
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