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This weekend, Sweden, Finland, Ireland and Denmark blocked a draft proposal of tax that would affect major tech corporations operating in the European Union.
The tax — nicknamed "GAFA," for Google, Apple, Facebook, and Amazon — is being championed by France, with the backing of European Competition Commissioner Margrethe Vestager, Reuters reported. Vestager has argued that a "global solution" is ultimately needed, but that if results are to come "in a reasonable period of time," Europe will have to lead the way with a harmonized tax.
France's National Assembly is voting today on a national GAFA tax, which would claim 3 percent from digital ads and other income sources for tech firms with revenues over 750 million euros, or about $842 million.
Of concern is the fact that tech companies often escape paying regular taxes, even as they and the demands on government budgets continue to grow. Apple for instance is known to have funneled billions in international revenue through Ireland, exploiting loopholes to minimize its global tax bills.
A 2016 European Commission ruling found that the Irish government had for years arranged preferential tax treatment, something illegal under E.U. law. Apple has already paid over $15 billion to comply with that ruling, though both it and the Irish government are working to appeal.
A close relationship with Apple could theoretically explain Ireland's decision to block a GAFA draft. New taxes could also affect other regional powerhouses, such as Sweden's Spotify, which is forecasting 2019 revenues of 6.35 billion to 6.8 billion euros.