PARIS — France should abandon its effort to unilaterally enact taxes on global Internet companies and should instead work at the international level to create a level playing field, according to a report from a government advisory committee.
The introduction of a digital tax “would be both unrealistic and economically devastating,” the French Digital Council said in a report delivered to President François Hollande’s government on Tuesday.
Fleur Pellerin, the digital economy minister, asked the council in January to study tax policy for the digital economy. French political leaders, struggling to bring the country’s budget deficit into line with European Union rules, have looked at companies like Google and Amazon, which make billions of dollars in France but pay almost no taxes, as a possible source of revenue.
The companies pay few taxes through legal, though sometimes questionable, practices like allocating profit to countries with lower taxes and exploiting regulatory differences between countries.
The council argued that the government’s efforts would be best deployed by working with the Group of 20 nations, the Organization for Economic Cooperation and Development and the European Union to change the global rules in such a way as to ensure fairer taxation of multinational technology companies.
Going it alone at the national level, the council said, “could undermine France’s position in these talks.”
The council noted that other taxes had been proposed, including for online advertising, e-commerce, bandwidth use and connected devices, but said those “do not allow the fundamentally global nature of the relevant value chains to be factored in. They could have harmful tax ramifications for French businesses and consumers.”
The council’s opinion is not binding on the government, but Ms. Pellerin has appeared for some time to be trying to dampen the expectations of officials hoping for a more aggressive policy.
In a statement Wednesday, Ms. Pellerin and Bernard Cazeneuve, the budget minister, noted that the council’s recommendations “go in the direction of the international action the government is already taking.” Those actions include support for the O.E.C.D.’s initiative to curb tax evasion and the European Commission’s work toward creating a consolidated corporate tax base for companies active in the 28-nation bloc.
French and international Internet companies welcomed the news. A statement from a consortium of industry associations, including the Afdel group, which represents software companies including Google, noted their “satisfaction” that the council had taken into account their “recommendations and thorough consultation.”
“It would be paradoxical, at the least, to enact measures that would inhibit the widest possible diffusion of digital devices and services and which would isolate France at a time of European harmonization,” the industry statement said.
Article source: http://www.nytimes.com/2013/09/12/business/panel-urges-france-to-drop-plans-to-tax-internet-firms.html?partner=rss&emc=rss