Technology

Google increases advertising rates by 3% in reaction to Gafa tax

Google announced, in a letter to French and Spanish advertisers, a 3% increase in advertising prices from May 2021. “These fees are intended to cover part of the costs related to compliance with the regulations relating to the tax on digital services in force in these countries “, justified the American company in its letter, consulted by Euractiv.

30,000 French customers
The Director General of the Union des Marques, Jean-Luc Chetrit, strongly regrets this measure since these additional costs affect all companies, even the smallest. However, by introducing the Gafa tax, the government was not seeking to penalize Google’s customers, numbering around 30,000 in France, he adds. He is now looking for a way to challenge this “tax transfer‘.

As a reminder, in the absence of international consensus, France had adopted its own “Gafa” tax in July 2019. It aims to impose the large technology companies – Google, Apple, Facebook and Amazon – at 3% of the turnover. ‘digital’ business carried out in France. This concerns advertising revenues, commissions earned by platforms and revenues linked to the sale of personal data.

This tax concerns companies with a turnover of more than 750 million euros worldwide, including more than 25 million in France. The first tax notices were sent at the end of last November. Spain passed a similar tax in February 2020 hoping to raise € 968 million over one year, according to finance ministry calculations.

Amazon increases seller management fees
Amazon was the first to respond. In 2019, the French subsidiary of the e-commerce giant decided to pass this tax on to the prices applied to third-party sellers of its platform. As of October 1, 2019, management fees have thus increased by 3%. In early September 2020, Apple made a similar decision by announcing an adjustment to its rates for iOS developers.

However, at this stage, Facebook would not consider applying additional fees to advertisers. He said he was waiting for a possible international agreement. However, at the level of the Organization for Economic Co-operation and Development (OECD), which brings together 37 states in the world, the negotiations are having great difficulty in succeeding. This blockage could be expensive, up to $ 100 billion in lost earnings, according to the international institution.

The United States ready to return to the negotiating table
But the arrival of Joe Biden at the head of the United States reshuffles the cards. He says he is ready to return to the negotiating table, unlike his predecessor. This tax “would allow us to collect a fair share of companies, while maintaining the competitiveness of our companies and reducing the incentives (…) to offshore activities that we certainly do not want to reward“Janet Yellen, US Secretary of State for the Treasury, said at a Senate hearing.

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