French Create Google Tax, Starts Jan. 1

The new tax on online advertising spends called the “Google tax” was passed by the French government this week and will start Jan. 1, 2011, Le Journal du Net reported. The tax will be paid by online advertisers, not Google directly unless they advertise their products a lot in France.

“The idea already several years old to tax online advertising will therefore become a reality in France. Industry professionals, including’Asic (Association of Community Internet Services) and the French branch of the IAB (Interactive Advertising Bureau), had strongly opposed the introduction of a tax that would undermine a nascent industry. They particularly criticized the reasoning of Senator Marini, whose avowed goal was to tax the American giants of the Web, but in fact leads to penalize French publishers,”le Journal reported in French.

Those opposed to the tax want to have Google, Apple, Facebook, Amazon, eBay and other non-French companies instead of small French businesses that use their services to grow local business.

“Such a tax would mechanically reduce the revenue of French players based in France and even delay the date at which they can hope to find their equilibrium. When we realize the fragility of these emerging companies for which advertising is often the only resource is to condemn many of these start-ups that have yet to need more than incubators gravediggers,” the protest group wrote to the legislators.

The “domination of Google” in France is worrying the country’s business regulatory body.

France’s competition authority is said to be worried about how the search engine giant’s omnipresence affects online advertising, and it launched an inquiry into Google two weeks ago. Results have yet to be published, but the body said today that it was adopting “targeted measures” to look into how Google shares ad revenue with internet media. Google is the top player in the French market, but that’s not in itself illegal — only if it can be found to have abused its profession will it face sanctions from the regulatory body.

Meanwhile, the French parliament has separately decided to impose a 1 per cent tax on all online advertising from next year — a move that is seen as an attempt to claw back some of the revenue from the largely offshore Google,” the French Press Review noted.

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