Tech London Advocates slams French Digital Service Tax

Founder Russ Shaw calls the bill "misguided" and the wrong message to send out to the international tech community

France

France's proposed 3% levy on big tech companies has been called "misguided" by the founder of Tech London Advocates because it will have negative consequences on the tech sector.

Russ Shaw, the founder of Tech London Advocates, writing in The Telegraph, said that France's attempt to "bash" big tech hugely underestimates the negative impact it will have on the country's burgeoning tech ecosystem.

Last week, the French government introduced a 3% tax on the French revenues of internet giants such as Google, Apple, Amazon and Facebook. The bill is a method to get around tax avoidance measures by large multinational corporations that pay most of their taxes in the EU country it's based in.

It was called the "GAFA" tax, (an acronym for Google, Apple, Facebook and Amazon) and applies to digital companies that have global revenues of more than 750 million and French revenues of over 25 million. But for Shaw, these figures don't add up, particularly for startups.

Advertisement
Advertisement - Article continues below

In 2017, tech companies in Paris alone attracted 634 million in venture capital and that figure rose significantly last year to 931 million. According to Shaw, French officials predict their new digital services tax will generate income of 500 million annually.

"Investors seek out companies growing in vibrant, optimistic ecosystems with the full spectrum of start-ups, scale-ups and large corporates. If France is slamming the door in the face of big tech, that 500m is going to be a big price to pay if the level of tech investment starts to plummet," Shaw wrote.

"The most important thing at stake is not the contribution to the economy, it is the message France sends to the international tech community."

With the traditional economy rapidly becoming digital, and thus dominated by tech companies, an effective framework to hold them financially accountable is needed. But what that framework should entail has become a major talking point due to its perceived consequences on the smaller operators in the same industry.

In October, chancellor Phillip Hammond announced a UK tax on the revenues of search engines, social media platforms and profitable online marketplaces. The UK Digital Services Tax will come into effect in April 2020 and will be a 2% levy estimated to raise 400 million per year.

Similar to France, the UK's proposed tax was met with concern from one of the country's biggest trade authority, Tech Nation.

"The announcement by the Chancellor, Philip Hammond, of a 2% tax on revenues of multinational technology companies risks stifling entrepreneurialism and innovation, which recent governments have done much to encourage," said Gerard Grech, chief executive of Tech Nation.

Featured Resources

The IT Pro guide to Windows 10 migration

Everything you need to know for a successful transition

Download now

Managing security risk and compliance in a challenging landscape

How key technology partners grow with your organisation

Download now

Software-defined storage for dummies

Control storage costs, eliminate storage bottlenecks and solve storage management challenges

Download now

6 best practices for escaping ransomware

A complete guide to tackling ransomware attacks

Download now
Advertisement

Most Popular

Visit/security/identity-and-access-management-iam/354289/44-million-microsoft-customers-found-using
identity and access management (IAM)

44 million Microsoft customers found using compromised passwords

6 Dec 2019
Visit/cloud/microsoft-azure/354230/microsoft-not-amazon-is-going-to-win-the-cloud-wars
Microsoft Azure

Microsoft, not Amazon, is going to win the cloud wars

30 Nov 2019
Visit/hardware/354237/five-signs-that-its-time-to-retire-it-kit
Sponsored

Five signs that it’s time to retire IT kit

29 Nov 2019
Visit/business/business-strategy/354195/where-modernisation-and-sustainability-meet-a-tale-of-two
Sponsored

Where modernisation and sustainability meet: A tale of two benefits

25 Nov 2019