Saturday, July 24, 2021

Google increases ad rates after digital tax

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PARIS: Google has notified its customers that it will increase ad rates on French and Spanish platforms by two percent starting in May to offset the impact of digital taxes on profits.

However, France has been collecting the tax since 2019, and Spain since this year, under pressure from voters to make U.S. tech giants pay a larger share of taxes in the countries where they operate.

The increase in the advertising fee is also “to cover part of the cost of complying with the laws regarding taxes on digital services in France and Spain,” said the Internet giant in an email seen by AFP.

In France, Internet companies with a worldwide turnover of more than 750 million euros and also 25 million in France have to pay a three percent tax on their activities in France, primarily for sales and advertising marketing activities.

Spain also charges a three percent tax on some of its businesses.

Jean-Luc Cetrit, head of Union des Marques, a major brand alliance, said Google’s decision to “remove brand investment capacity at a time when all companies are experiencing an unprecedented crisis.”

However, Google did not reply to AFP‘s requests for comment.

In October, Amazon also responded to the French tax by raising the rates it charges from market vendors based in France by three percent.

But Apple followed suit, increasing the commission it charges developers who sell applications on its platform not only in France but also in Italy and Britain.

France Tax Movements:

The French tax movement on global digital companies has made it a pioneer in the struggle to find a fair tax system for Internet multinationals, whose tax bill is often small compared to their revenue.

The tax added 400 million euros to the French government’s coffers in 2019, and the government applied the tax again last year, despite pressure from the Trump administration to withdraw it.

With President Joe Biden at the White House, the Organization for Economic Cooperation and Development (OECD) – which is overseeing digital tax negotiations – has said it expects a meeting of G20 finance ministers in July to reach an agreement on the Subject.

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