In House - The FindLaw Corporate Counsel Blog

Facebook and Google Face Billions in New Taxes, Maybe

Benjamin Franklin said death and taxes are certain, but he was an American.

Americans shouldn't have to worry about foreign taxes, right? According to reports, however, foreign countries are trying to tax internet giants like Facebook and Google.

They can't collect income taxes from the U.S.-based companies, so they want "digital taxes" for services in their countries. Benjamin Franklin might be rolling over in his grave except for one thing: he was quite the foreign diplomat.

Dozens of Countries

The European Union apparently started it, proposing taxes based on the tech companies' local revenues. Now South Korea, India, and more than half a dozen other Asian-Pacific countries are looking at it.

The Wall Street Journal said Mexico, Chile, and other Latin American countries also want a piece of the American pie. Combined, they could add billions of dollars to tech companies' tax bills.

"Countries across the planet now understand they must impose a digital tax," said Bruno Le Maire, France's finance minister. He is lobbying for the tax across Europe.

It is a delicate if not a done deal, however. Opponents see digital taxation as virtual obstruction to internet business. They say it will hurt smaller firms and stifle international trade -- not to mention a free internet.

EU's Digital Tax

Meanwhile, the EU is moving ahead with its plan to tax locally generated revenue by big tech firms. It is the first legislation of its kind, and could generate more than $500 million annually there.

The tax would impose levies on digital services provided by outside firms to people in a given country. For example, a country would tax services that collect user data for targeted marketing to local residents.

That tax scheme would impact companies like Facebook and Google the most. Franklin did not use Facebook or Google, of course, but as an ambassador he helped keep France in the war against Great Britain.

Related Resources: