France and Germany push 3% tax on revenues from online advertising

The ad operations of Google and Facebook in the EU will be significantly affected if the proposal is agreed upon by all 28 member states of the European Union.

As per a European source, France and Germany have sought to salvage a EU tax proposed that aims to levy digital tax on large tech firms by narrowing its focus to cover only revenues earned from online advertising.

Both countries are set to back the text of the proposal when the finance ministers meet in Brussels.

In March 2018, the European Commission had proposed a 3% tax on the online revenues of large tech firms and accused them of funneling profits through member states with the lowest tax rates to keep their overall tax down.

While France has backed the proposal, Germany has so far held back due to some misgivings, while countries which benefit from such tax moves, such as Ireland, Sweden, Denmark, and Finland have opposed the proposal.

“What matters for France is that there is a legally binding instrument that can be adopted as soon as possible,” said French Finance Minister Bruno Le Maire as he arrived for talks with his euro zone counterparts.

He went on to add, “If we can reach an agreement between France and Germany in the coming hours…, that will be a first step”.

The Franco-German proposal, differs from that of the original proposal put forward by the European Commission in that it aims to impose a 3% tax only on advertising revenues and not cover areas including data sales and online platforms.

If this proposal is accepted by all member states, it will have significantly impact the ad operations of Google and Facebook. In the original European Commission proposal, the tax was intended to be a temporary “quick fix” until a broader solution could be found among OECD members.

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