The European Union plans to impose a tax on tech companies' revenues of about 2% to 6%, French Finance Minister Bruno Le Maire said in an interview with newspaper Le Journal du Dimanche.
The exact tax rate is expected to be confirmed within a few weeks, and is likely to be closer to 2% than 6%, according to the French government minister, Reuters reports.
France Italy, Germany and Spain are pushing for tax reforms in the tech sector, as they want a move away from the EU's current tax framework under which tech companies, including Apple Inc., Alphabet Inc.-owned Google Inc., Amazon.com Inc., Facebook Inc. and Microsoft Corp. transfer profits from European countries with higher tax rates, such as France, Germany and the United Kingdom, to offices in other countries within the European Union that have lower corporation tax regimes, such as Ireland and Luxembourg.
Current European Union rules allow companies to base their headquarters in European countries with lower tax rates, thereby paying the local tax rate on profits rather than the tax of each European market they operate in.
At present, Apple's European head office is in Cork, Ireland, while Facebook leads its European operations from Dublin. Meanwhile Google and Amazon are headquartered in Dublin and Luxembourg, respectively.
The latest proposal, focused on companies' revenues rather than profits, may force tech companies like Google, Amazon and Facebook to open up their tax affairs across the EU.
Le Maire said earlier that the U.S. government was prepared to entertain discussions with Europe on the latter's plans to collect taxes from tech giants. The U.S. government agreed to the creation of a working group with France, which will allow a bilateral review of proposals made by the commission.
In addition to the European Commission, the Organisation for Economic Co-operation and Development is trying to harmonize various governments' tax proposals to ease the harm they could cause to companies' financial positions and will present the G20 finance ministers with a report on the subject this April.
The EU's tax proposal is the latest development in a range of European-wide efforts to tackle aggressive tax avoidance. In recent years, the European Commission launched probes into several U.S. tech companies' taxation practices.
In October 2014, the EU's highest body started an in-depth investigation to determine whether Amazon's tax agreement in Luxembourg complied with EU rules on state aid. The EU also decided to continue its probe into Apple's tax dealings in Ireland, even after the company's plan to move some of its capital back to the U.S., causing former Treasury Secretary Jack Lew to meet with EU Competition Commissioner Margrethe Vestager.
When approached by S&P Global Market Intelligence, both Apple and Facebook declined to respond.