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Google flags higher ad rates in France, Spain after digital tax

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Paris: Google has told customers that it will increase advertising rates on its French and Spanish platforms by 2% from May to help offset the impact of digital taxes on profits.

France has been levying the tax since 2019, and Spain has been under pressure from the voters this year to require American technology giants to pay more taxes in the countries where they operate.

The ad rate increase is to “cover a part of the cost of conforming to laws concerning taxes on digital services in France and Spain,” the internet giant said in an e-mail seen by AFP.

In France, internet companies with more than 750 million euros ($895 million) in worldwide sales, and 25 million in France, must pay a three percent tax on their French operations, notably advertising sales and marketplace operations.

Spain also imposes a 3% tax on some of its businesses.

Jean-Luc Chetrit, head of the Union des Marques, an alliance of major brands, said Google’s decision would “amputate the investment capacity of brands at a time when all companies are going through an unprecedented crisis.”

Google did not respond to AFP’s requests for comment, but Karan Bhatia, its head of government affairs, warned in February that “Taxes on digital services complicate efforts to reach a balanced agreement that works for all countries.”

“We urge these governments to reconsider what are essentially tariffs, or at least suspend them while negotiations continue,” he said.

Google as well as Apple, Facebook and Amazon — grouped together as “GAFA” — are in the crosshairs of European governments that accuse them of exploiting common market rules to declare all profits in the bloc in low-tax jurisdictions such as Ireland or Luxembourg.

Critics say that although they profited from the surge in online activity due to domestic work and social evacuation rules during the Covid-19 crisis, they deprived the national tax authorities of millions of euros.

These companies countered that they were unfairly targeted by discriminatory taxation.

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