France sets sights on multinationals over taxes

The French government could impose a raft of measures on internet giants like Google and Amazon to prevent the firms simply avoiding the demands of the French tax man, a new report advises.

France sets sights on multinationals over taxes
The French government could impose a raft of new levies to frustrate tax avoidance strategies used by internet giants. Photo: AFP

New levies could be imposed to frustrate tax avoidance strategies currently used by Internet commerce giants like Google and Amazon, according to a report by a French government body released Monday.

"Specific new fiscal tools could be envisaged, at the European level or in a core group of countries to counter the tax optimisation strategies" of Internet giants, said the report by France Strategie, a body that advises the French prime minister's office.

Complex, but legal, tax structures have allowed companies such as Amazon and Google to pay little profit tax in most European countries although they generate hundreds of millions in profits in these markets.

With European governments cutting spending as they struggle to reduce their deficits and debt, such tax avoidance by multinational firms has become a hot button issue and France has been one of the most vocal about the need to close such tax and accounting loopholes.

Using a practice known as transfer pricing, multinationals charge their subsidiaries in each country for use of intellectual property and most profits are then shown in European countries which have lower corporate tax rates, such as Ireland where Google has its European headquarters.

To get around such strategies the report suggested taxing advertising revenue, which can be used as an approximation of the profit generated in the country.

French tax inspectors searched Google's Paris offices in June 2011 as they looked into how the company used transfer pricing, lowering profits reported in France on advertising sold in the country and thus taxes paid there.

Taxes could also target the number of users on a platform, either consumers or advertisers, or on the amount of data transferred.

It also suggested higher taxes on companies which stock data on users and sell it.

France has already moved against online companies located outside of the country but selling video content to French consumers by making them pay sales tax.

France wanted to make sure companies like Netflix, but also Google and Amazon, do not escape paying taxes that companies based in the country must pay to help subsidise movie and TV production.

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French watchdog fines Google and Amazon subsidiary €135m for unauthorised cookies

France's CNIL data privacy watchdog said on Thursday it had fined two Google units a total of €100 million and an Amazon subsidiary €35 million over advertising cookies.

French watchdog fines Google and Amazon subsidiary €135m for unauthorised cookies
Photo: AFP

The regulator said the fines were “for having placed advertising cookies on the computers of users … without obtaining prior consent and without providing adequate information.”

A cookie is a small piece of data stored on a user's computer browser that allows websites to identify users and remember their previous activity.

The CNIL said when a user visited the website, several cookies used for advertising purposes were automatically placed on his or her computer, without any action required on the user's part.

It said a similar thing happened when visiting one page on the website.

CNIL said this type of cookie “can only be placed after the user has expressed his or her consent” and thus violated regulations on receiving prior consent.

It faulted Google for providing insufficient privacy information for users as it did not let them know about the cookies which had been placed and that the procedure to block them still left one operational.

CNIL also said Amazon had not provided clear or complete information about the cookies it placed on computers of users until a redesign in September 2020.

Google also stopped placing cookies on the computers of users without consent in September, CNIL said, but added it still does not provide a sufficient explanation for their use.

The regulator said “no matter what path the users used to visit the website, they were either insufficiently informed or never informed of the fact that cookies were placed on their computer.”

The €35 million fine is on the Amazon Europe Core subsidiary.

CNIL imposed fines of €60 million on Google LLC and €40 million on Google Ireland Limited.