France To Extend "Culture Tax" To Google As Italy Delays "Google Tax"

France is preparing to extend its "culture tax" to Facebook, YouTube, DailyMotion and other Internet giants. The culture tax is currently levied on French cinemas, TV broadcasters, Internet service providers and other entities that deliver entertainment in any way. The funds support the production of French film and TV.

The Conseil supérieur de l'audiovisuel (CSA, "Superior Audiovisual Council") is responsible for determining which entities should be taxed. Generally the CSA selects markets and technologies that deliver entertainment because the simpatico between them and the beneficiary production companies is intuitively identified. Because Facebook, et al can be consider entertainment providers, they should have to cough up, the CSA says.

YouTube and DailyMotion are obvious fits for the tax, the CSA says, because they do produce some of their own content in partnership with professional production companies. That is to say, it's not all grassroots user content. YouTube offers 60 specially formulated channels for French viewers, while DailyMotion delivers Dailysport.

Additionally, the CSA is considering extending the culture tax to devices like smartphones and tablets, as they too deliver entertainment. Just like the Internet giants, devices are diverting some attention away from French culture per se. Thus, the CSA reasons, some compensation back towards the stoking of French culture ought to be made possible through a 1% tax.

The news of CSA's intentions to tax foreign-based Internet companies comes hot on the heels of Italy's stated intention to force foreign companies like Google to divert their ad buying patronage to Italy-based businesses that pay taxes to the Italian government. Google and other companies tend to base many of their operations in tax havens like Ireland and Bermuda, while paying very little in taxes to the countries they profit the most from.

The Italian plan will not be put in place until July 2014, Reuters reported Friday.

The reason for such measure is one of fairness, goes the CSA's reasoning. For example, Google earns $2 billion a year from French viewers, so for all practical purposes Google is a business operating in that country and should therefore give something back, just as any local company is required to do, says the agency.

President Hollande calls the company's low tax-to-revenues ratio in France "unacceptable."

SOURCE: Businessweek