GAFA Tax Explained (Google, Amazon, Facebook, Apple)

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GAFA is an acronym for Google, Apple, Facebook, and Amazon. GAFA Tax refers to the taxes paid by US tech giants like Google, Apple, Facebook, Amazon etc in Europe. The low tax rates paid by these US tech giants in Europe has repeatedly caused anger among voters in many European countries. There is growing discontent among European members regarding US tech giants paying meager share of taxes.

GAFA tax

GAFA Tax levied by France

With efforts to reform a European Union tax law not bringing the desired results, France is going to introduce from January 1, 2019 a digital tax on technology giants such as Google, Facebook, Apple and Amazon. The French government’s “GAFA” tax” is being introduced to combat attempts by the firms to avoid paying what is considered a “fair share” of taxes in the country, by taking advantage of European tax laws. The new tax regime is expected to bring in an estimated 500 million euro ($570 million) to the country’s cofferes for 2019. Major technology companies have come under the scrutiny of lawmakers in countries like France and Britain for allegedly routing profits through operations in countries with extremely low tax rates or other arrangements

European Commission proposal for GAFA Tax

The European Commission published proposals for a three per cent tax on the revenues of major tech companies with global revenues above 750 million euro a year and taxable EU revenue above 50 million euro. But to become law, EU tax reforms need the support of all member states. And some countries, including Ireland, the Czech Republic, Sweden and Finland are yet to come on board to bring the reforms

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