SUMMARY IN ENGLISH: STEPPING STONES TO A NEUTRAL AND FAIR TAXATION OF DIGITAL ECONOMY
I. THE ORIGINS OF THE DEBATE ON DIGITAL ECONOMY TAXATION
A. CHRONOLOGY OF THE FINANCE COMMITTEE'S WORKS
Mr. Philippe Marini, chairman of the Senate's Finance Committee originally raised the issue of the taxation of Internet players without their tax domicile in France.
The issue of taxation fairness and the need to confront distorted competition and tax avoidance in particular in the online advertising and e-commerce sectors, has created a debate in France on how to make groups which are fiscally established in other countries of the European union - in complete compliance with French and European taxation rules - and which do not pay corporation tax in France although they use French public infrastructures and services, contribute to the State's finances.
Therefore, the Finance Committee ordered a study from Greenwich Consulting firm in 2009 and held a first roundtable meeting on the impact of the growth of e-commerce on the State's finances on April 7, 2010, on the flight of taxable revenue from online advertising as well as e-commerce 63 ( * ) . The finding was unequivocal. Irrespective of the taxation concerned (corporation tax, VAT, advertising tax), the worldwide e-commerce players have built their economic model and established their head offices in states with low taxation: mainly Ireland and Luxembourg.
This debate was on the Finance Committee's agenda throughout 2010 and resulted in a « second Roundtable meeting on e-taxation » on Wednesday, May 18, 2011, a week before the «e-G8» emphasizing the conjunction of the legislator's, executive's and businesses' interests in the digital economy .
These works had an impact on the 2011 Finance Act , because two amendments proposed by Philippe Marini, who was then the «Rapporteur général» were adopted to create an online advertising tax and an e-commerce services tax (Tascoé).
B. CHANGES IN THE LEGISLATIVE AND REGULATORY CONTEXT ON THE TAXATION OF E-COMMERCE SINCE THE INITIAL 2011 FINANCE ACT WAS PASSED.
1. The «first version» of the online advertising tax: passed and then rejected
Parliament incorporated an online advertising services tax of 1% of the amount of the service when the 2011 Finance Bill was being debated. Even though the fiscal revenue was very small, €20 million at most, and this measure was rejected last June before it came into force on July 1, 2011, the principal merit of this initiative is that it put the issue of digital taxation firmly in the public arena. This first proposal was intended to provide a concrete answer to the President of the Republic's desire to combat tax evasion by the large multinationals in the Internet and e-commerce sectors.
At the time this measure, improperly called the «Google Tax» was broadly approved by the Senate but was removed from the 2011 amended Finance Act, due to very strong pressure in the media by the Internet sector and the partially founded argument that as it only applied to advertisers based in France there was a risk that these groups would relocate their advertising businesses and this new tax would only be by French SMEs alone. This danger must be avoided by proposing a measure which will not target net surfers and will not weigh on French SMEs alone.
2. The tax on the purchase of e-commerce services (Tascoé): withdrawn for further review
The second amendment, aiming to create a tax on the purchase of e-commerce services (Tascoé) on Internet professionals was withdrawn following the Government's commitment to undertake a «global review» 64 ( * ) . This second measure has a considerable range.
Although the highest estimate of the revenue from the online advertising tax is €20 million (1% of a turnover of €2 billion), the tax revenue from the Tascoé could be as much as €500 million (0.5% of a turnover of € 100 billion from B to B e-commerce.
Although all sectors, such as the information, communications and culture sectors are now aware of the issue, little progress has been made on the operational front. This is why Mr. Philippe Marini agreed to sponsor the first Digital Taxation Forum held by the French Telecom Federation (FFT) (Fédération française des télécoms) on February 14, 2012 to revive the debate.
* 63 Report n° 398 (2009-2010), « Le développement du commerce électronique: quel impact sur les finances publiques? », April 7 th , 2012, by Philippe Marini.
* 64 Georges Tron, Secretary of State for the Civil Service : « Since we are all agreed on the interest of this subject and the questions asked, notably in terms of European competition, and that there must be global review of taxation, I can make the commitment, on behalf of the Government, to establish a working group of MP's, experts, entrepreneurs, response for a global review. [....] Reporter General, if you agree, I propose setting up this working group, for our review, and to see whether we should take your amendment in its current form, or whether we should be involved in a different form » ( Meeting of November 23 rd 2010 ).