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THE LENS
Digital developments in focus
| less than a minute read

Has France given up on an EU digital services tax?

France seems to have given up on reaching consensus on an EU-wide digital services tax, by announcing that it will introduce its domestic DST from 1 January.  Earlier this month France had said that it would give the EU until March to agree a pan-EU deal.  

So what has changed?

Domestic and EU-wide DSTs are only meant to be a temporary solution until the OECD secures agreement on an internationally agreed profit allocation model.  But the concern with any temporary solution is that once a country is receiving the tax revenues - paid by large multinationals rather than voters - it may find it difficult to give them up.  

The French story demonstrates that this is a real concern.  President Macron needs to fund his measures to calm the gilets jaunes, and accelerating the DST provides a useful source of revenue, from taxpayers who are not protesting on the streets.

But this piecemeal approach is no way to design an international tax system for the 21st century.    

France will impose a new domestic tax on big international tech groups such as Google and Facebook from the start of 2019

Tags

digital services tax, tax reform

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