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France to Impose ‘Cultural Tax’ on Tech Giants to Fund Cultural Projects

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By Industry Leaders Magazine | May 16, 2013 11:02 AM EST

Taxes in France are levied in various forms. No one is spared from it, not even ex-president Nicolas Sarkozy who finally had to shift to neighboring country to avoid paying taxes. The latest to experience French examination for imposition of taxes are giant technology companies operating in France, including Apple Inc., Amazon.com Inc. and Google Inc.

France is seriously considering imposing tax, which would be widely known as 'cultural tax', on the aforementioned technology companies and others so as to fund various cultural projects. It is not new for companies to pay fees in France to propagate art, cinema and music. Most entertainment companies from television segment to radio broadcasting and Internet Service providers are already in the government's tax net.

Origins of Cultural Tax

In fact, we can trace origins of cultural taxes in France back to 1960 when the proud European nation opposed to the dominance of the American language and products and introduced various regulations to minimize the process of " Americanization."

The current report that forms the basis of the new 'cultural tax' is called: Culture-Act Two. It was prepared by the former head of Canal Plus television, Pierre Lescure, and showcases "the determined adaptation of the French cultural exception in the face of digital usage is, as someone said, a burning obligation".

This new tax is consistent with the France's regulatory system that includes several quotas. For example, television firms and telecom service providers contribute in the form of taxes to offset the subsidy.

As of the present, companies such as Amazon.com Inc., Google Inc. or Apple Inc. are not part of the tax-paying community in France and President François Hollande is interested in capturing huge revenues from these companies. As 'creators of content,' all of these companies are liable to be taxed in the 'cultural tax' category, considering latest statistics that indicate that common people spend more on hardware and less on content. Even though there have been companies such as Google Inc. already funding projects to the tune of 60 million euros, France appears to be reconsidering the role of technology companies in their country.

Time to pay

The 500-page report, released on the 13th of May by French President François Hollande, will put several economic negotiations on hold, including the new trade meeting between the EU and US. However, the President appears firm about imposing his policies in support of protection of art, culture and music in France.

The report includes more than 80 recommendations and one of them is quite interesting as it recommends taxes on sale of tablets and other smartphones that use online connectivity. The funds raised from such taxes are expected to fund French cultural activities as well as movies.

François Hollande has been categorical that France would continue to hold talks on new EU and US trade laws only if the cultural tax is exempted from discussions. According to the report, the reasons for imposing cultural tax on 'big international players' is because the big companies skip around certain French regulations and ignore the importance of the French cultural diversity. Considering the fact that in most of the new channels French firms and stakeholders are unable to place valuable French-origin content within the new system, it is imperative that the French government takes action.

Now, it is the turn of top-notch technology companies to pay their cultural dues in France!

Industry Leaders Magazine

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