France, Germany aim to keep digital tax alive with new proposal

France, Germany aim to keep digital tax alive with new proposal

On Tuesday, France and Germany put forward a final hour compromise that scales back the broad plan initially envisioned by Paris. It would have imposed a 3 percent levy on revenues made by major IT firms in the European Union market. He urged the European Union to reach a compromise on the revenue levy for digital giants by March.

A broader turnover tax on firms with significant digital revenues in Europe would have hit companies such as Apple and Amazon harder, but the Franco-German proposal would not cover data sales and online marketplaces.

He said: "Like any European compromise, some will be disappointed".

Le Maire said that if the tax were adopted, individual countries like France would be free to impose it on a wider basis.

Donohoe added that it would be better to deal with the taxation of large digital companies seeking a broader global deal at the Organisation for Economic Cooperation and Development (OECD).

Finance Minister Paschal Donohoe is understood to have reiterated that position at yesterday's meeting in Brussels.

German Finance Minister Olaf Scholz said tax receipts generate by the proposed Franco-German tax would be small, noting a similar tax planned by Britain was expected to raise around 500 million pounds ($641 million).

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During an extended meeting of the European Union finance ministers of finance in Brussels, the two key players of the Eurozone - Germany and France - chose to set aside plans for an ambitious Europe-wide digital tax on tech companies that mostly targets advertising sales that could leave tech-giants free from being heavily taxed. "I promise to be constructive and I'm ready to look at the proposal, but I still have serious concerns with it", said Finnish Finance Minister Petteri Orpo.

The European Commission is to formally propose the measure in the coming weeks and member states will vote on it before the end of February, according to a draft text seen by the Financial Times.

"We expect the OECD will reach an agreement by 2020 on proposals aimed at tackling the challenges raised by the digitalisation of the economy and tax avoidance".

"We urge the Council to adopt the legally binding directive on DST without delay and in any case before March 2019 at the latest".

The latest proposal is meant to come into force in January 2021, but only if the Organisation for Economic Co-Operation and Development (OECD) fails to reach a consensus on a global approach by then.

The tax plan requires unanimous support to come into force as EU-wide legislation. "It will expire by 2025".

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