Major guidelines of the "French Digital Services tax bill" examinated tommorow at the Parliament
On Monday April 8th, the French "Digital Services Tax Bill" will be examinated at the Parliament.
Most countries continue to lead efforts with partners in the EU, G-20 and OECD to reach international agreement on reforms to the international corporate tax framework, and will disapply the DST when an appropriate international solution is in place. France has introduced DST as an interim measure to ensure the corporate tax system is sustainable and fair across different types of businesses.
On March 6, 2019, the French government presented a bill on the taxation of large digital enterprises (“the Bill”) with the aim of introducing a domestic digital services tax (“DST”) comparable to the tax proposed in 2018 by the European Commission.
Here is a sum up of the main features of the French DST that will be examined :
° The french DST will apply to resident and nonresident companies with a worldwide turnover exceeding 750 million euros ($842 million) and a French turnover exceeding 25 million euros;
° The tax base will be the French-source turnover derived from online advertising, from the sale of personal data for advertising purposes and from the provision of peer-to-peer online platforms. Among other services, the following are excluded from the tax base: online sales of goods or services (including digital services such as video-on-demand or music-on-demand), payment or e-mail services, regulated financial services and sales of personal data not obtained through the internet. The French-source turnover will be calculated using a digital presence coefficient based on the proportion of French users; the rate of tax will be 3 percent;
° The tax will be deductible from the French corporate income tax base, if any; and
° The tax will apply retroactively with effect from January 1, 2019 and until an agreement on the taxation of the digital economy is concluded at OECD level.
° The DST is only an interim solution to ensure fair taxation of digital businesses are collected based on the residency of consumers in the home jurisdiction.
° The DST shares a number of features with a VAT, by applying “destination” principles to determining the tax base, and in potentially allowing taxpayers to leverage information already collected from their customers (in a VAT context) for determining their location.
° France has introduced the bill to levy DST. Businesses must revisit their business models and assess the impact of the tax and compliance cost burden on their models.