France orders big tech companies to pay digital service tax

The France Finance Ministry has sent out notices to big tech companies liable for its digital service tax to pay the levy as planned in December. France suspended collection of the tax, which will hit companies like Facebook and Amazon, early this year while negotiations were underway at the Organisation for Economic Cooperation and Development on an overhaul of international tax rules.

“Companies subject to the tax have received their notice to pay the 2020 instalment,” a Finance Ministry official said.

France last year applied a 3% levy on revenue from digital services earned  by companies with revenues of more than 25 million euros in France and 750 million euros worldwide.

The ministry had hoped to raise about 500 million euros this year from the tax, but the 2021 budget bill puts the figure at 400 million.

Paris has said it will withdraw the tax as soon as an OECD deal is reached to update the rules on cross-border taxation for the age of online commerce, where big internet companies can book profits in low-tax countries regardless of where their customers are.

 “We will levy this digital taxation mid December as we always explained to the U.S. administration,” France Finance Minister Bruno Le Maire said.

“Our goal remains to have an OECD agreement by the first months of 2021 because we remain deeply convinced that  the best way of dealing with this key question of digital taxation is to get a multilateral agreement within the framework of the OECD,” he added.