EU to agree new 'tech tax' by the end of March as France plans its own five per cent 'digital services tax'

French Finance Minister claims deal on tech tax will be in place before the European elections

The European Union is close to an agreement for a new tax on technology companies, such as Amazon, Facebook and Google that, it is claimed, do not pay their fair share of tax.

In an interview over the weekend in the Journal du Dimanche, Bruno Le Maire claimed that "an agreement is now within reach… despite the hesitation of some countries". A deal is expected to be announced before the forthcoming European elections in May.

The breakthrough, added, came after a compromise between France and Germany in December.

In the meantime, he continued, France is planning to forge ahead with its own ‘digital services tax'.

"We are working on a tax that will be applied this year affecting all companies offering digital services representing a turnover of more than €50 million, and €25 million in France.

"If these two criteria are not met, they will not be imposed. The tax will be applicable from 1 January 2019 and its rate will be calculated according to a turnover with a maximum [rate] of five per cent."

The tax, he added, ought to raise about €500 million for the French Treasury. However, it may equally persuade digital services organisations to avoid France altogether and, therefore, raise a lot less.

The UK, meanwhile, announced its own proposals for a levy on digital businesses in the Budget in October - a move that provoked a response from US congressmen who claimed that it was effectively a tax on US internet companies.

The UK levy is aimed at online companies trading in the UK with turnover of more than £500 million per year. The tax, levied at two per cent of UK-derived revenues is intended to eventually raise around £400 million from companies operating as search engines, social media platforms, and/or online marketplaces.

It is due to come into effect in April 2020.