France set to drop digital sales tax proposal

Tue 23rd Jul 2013

France’s government is likely to quietly drop a plan to introduce a French sales tax on digital services such as the provions on internet access, online advertising etc.

The plan, raised in February 2013, had looked to tax the otherwise French corporation tax free income of major internet multinationals such as Google and Amazon. These groups can use the current global tax regime to sale into countries where they do not have a permanent establishment without being subject to direct taxes.

French digital consumption tax too complex

The idea had been to raise a levy on the sales of these groups. However, the committee review a mechanism to introduce such a French consumption tax concluded that it would be too complex in design and would draw in many small French internet companies into the tax net.

This decision follows the OECD’s recent BEPS report for the G20 which indicated that it would not attempt to reform the global digital tax regime for the time being.