France moved Wednesday to impose a 3 percent tax on Google, Apple, Facebook and other tech giants in a bid to advance an international agreement to clamp down on corporate tax avoidance.
The proposed levy would affect Web companies that bring in more than €750 million ($848 million) in global revenue and €25 million ($28 million) in French receipts, and it would be applied only on domestic sales.
More than two dozen companies meet that threshold, Finance Minister Bruno Le Maire said during a news conference in Paris, according to the Associated Press. Most are U.S.-based, though some large European and Chinese firms also would be compelled to pay.
The tax will raise an estimated €500 million euros ($566 million) a year, Le Maire said.
The French proposal, like others from European nations, comes amid broader efforts to modernize the international tax system. The Organization for Economic Cooperation and Development is developing a plan to close global tax loopholes that allow billions of dollars to escape government coffers. Critics say that tech giants generate enormous wealth, but are not appropriately taxed where they do business.
“These giants have created much value and they have created many jobs, and I will never denounce their success,” Le Maire said, according to Bloomberg. “But we must fight against the distortions that these giants have created, especially on tax optimizations and on the dominant positions many have created. We must create taxation for the 21st century.”
Le Maire cited EU figures that show major tech companies pay, on average, 14 percent less tax than other European companies, according to the AP report. He said the tax would exclude transactions that involve the direct sale of products online but would mostly target firms that use data to sell digital advertising.
The French parliament is expected to pass the tax proposal later this year.
The cost to individual American tech companies could be significant, especially if other nations follow suit or the European Union establishes its own bloc-wide tax on tech firms. Facebook, for instance, does not break down revenue by country, but it took in nearly $14 billion in Europe last year. According to the company’s earnings reports, Facebook paid an effective tax rate of 12.75 percent, on average, in 2018.
Facebook said in a statement that it pays all taxes required by law wherever it operates. “We hope that the OECD will finish its work and create a clear, sustainable global agreement on tax,” the company said.
Google said it pays the vast majority of its corporate income tax in the U.S., noting in a statement Wednesday that it has paid a global effective tax rate of 23 percent for the past 10 years. “We always pay all of the taxes due and comply with the tax laws in every country we operate in around the world,” Google said.
Apple and Amazon did not immediately respond to requests for comment.