This move will affect companies like Google, Apple, Facebook and Amazon.
France, along with Germany, had been pushing for the European Commission to agree measures by the end of this year, said BBC. However, it faced opposition from countries like Ireland, the Czech Republic, Sweden and Finland. It has been widely reported that France as well as UK have opposed the practices of firms routing profits through low-tax havens like Luxembourg and Ireland to mark up their profits.
Earlier in 2018, the European Commission published proposals for a 3% tax on the revenues of large internet companies with global revenues above €750m a year and taxable EU revenue above €50m, added BBC. The Commission claims that top digital firms pay an average tax rate of only 9.5% in the EU, which is significantly lesser than the 23.3% paid by traditional companies.
However, there is apprehension towards the imposition of an EU tax as it could breach international rules on equal treatment for companies across the world – the rule is EU tax reforms require the support of all member states to become law.
While US tech companies insist they are playing by the rules. the European Commission said it wanted to tax companies according to where their digital users are based.