The Problem with France’s Plan to Tax Digital Companies

France recently approved a 3% tax on revenues generated by large digital companies in its territory, a move that is now being investigated as a potentially unfair trade practice by the U.S. government.

The French legislation, which would invariably affect U.S. tech giants such as Alphabet, eBay, and Facebook, is the kind of tax that the European Union has wanted to impose for years. Emboldened by the EU stance, Asian and Latin American countries have begun discussions on how to tax tech giants on revenues earned in their territories. If implemented, these proposals have the potential to shift billions of dollars from tech companies to local economies. But we argue that one-size-fits-all taxation of large digital firms based on their gross revenues is too blunt an instrument to address the putative budgetary deficits of local governments. We call for a more substantial debate on the issue and more imaginative ideas to ensure fair and effective taxation.

Read the entire post on Harvard Business Review