France targets Google, Amazon and Facebook with 3% digital tax

Key Points
  • The French government introduced a digital tax on Wednesday aimed at internet companies like Google, Facebook and Amazon.
  • The 3 percent tax will apply to the French revenues of big tech companies.
  • An EU-backed effort to pass a 3 percent tax on the revenues of internet companies failed last year.
France's Bruno Le Maire.
Eric Peirmont | AFP | Getty Images

The French government on Wednesday introduced a tax aimed at internet giants like Google, Amazon and Facebook, forging ahead with stricter regulation on big tech without broad-based support from the European Union.

The 3 percent tax will apply to the French revenues of roughly 30 major companies, mostly from the U.S.

France's Finance Minister Bruno Le Maire estimated the tax will raise roughly 500 million euros ($565 million) per year.

The French tax alone would represent just a sliver of the revenues of American tech giants. But it could pave the way for further regulation of U.S. tech companies in Europe, including an EU-wide digital tax.

An EU-backed effort to pass a 3 percent tax on the revenues of big internet companies failed last year amid concerns from countries including Ireland and Germany, who feared retaliation from the U.S. The Organization for Economic Cooperation and Development (OECD) is currently examining a global digital tax but has said it won't come to a conclusion until 2020.

France's Le Maire has been an outspoken proponent of a digital tax, arguing Google, Amazon and Facebook benefit from lower tax rates than European companies. The French minister has said France would withdraw its own tax once the OECD reaches an agreement.

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Other countries including the U.K., Germany and Spain are also working on their own digital tax measures.

The French tax would apply to companies that generate worldwide revenues on their digital services of at least 750 million euros ($847 million), with 25 million euros ($28 million) from within France.

"We always pay all of the taxes due and comply with the tax laws in every country we operate in around the world. Google pays the vast majority of its corporate income tax in the United States, and we have paid a global effective tax rate of 23% over the last ten years," a spokesperson for Google told CNBC via email on Wednesday.

In an emailed statement to CNBC, Facebook said it pays all taxes required by law in the countries where it operates, adding it will continue to comply with French and European legislation.

"In France, we voluntarily set up a new sales and invoicing structure in 2018. From now on, all revenues from advertisers supported by our teams in France are recorded in France. We hope that the OECD will finish its work and create a clear, sustainable global agreement on tax," a Facebook spokesperson said.

Amazon was not immediately available for comment when contacted by CNBC.