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France, Germany aim to keep digital tax alive

Reuters  |  BRUSSELS 

(Reuters) - and sought on Tuesday to salvage a proposed EU tax on big digital firms including and by narrowing the focus to cover only companies' online revenue.

Eager to break months of deadlock, the two countries' put a new proposal to their EU counterparts at a meeting on the issue in

In March, the European Union's arm proposed a 3 percent tax on big digital firms' online revenues, accusing them of funnelling profits through member states with the lowest tax rates to keep their overall tax down.

While has pushed hard for the digital levy, countries such as Ireland, Denmark, and have opposed it while has also had misgivings.

The new proposal would still impose a 3 percent levy, but not cover data sales and since it would be focused on revenues.

That means companies with big online operations like and would be the most affected as they make the majority of the market in

A broader turnover tax on firms with significant digital revenues in would have hit companies such as and harder.

"It's a first step in the right direction which in the coming months should make the taxation of digital giants a possibility," French said as he arrived for the meeting.

"Will it put all arguments to rest?, certainly not," he added.

Le Maire said that if the tax were adopted, individual countries like would be free to impose it on a wider basis.

In the original proposal, the tax was intended to be a temporary "quick fix" until a could be found among members.

Under the proposal, the tax would not come into force until January, 2021 and only if no has been found.

The tax requires the support of all 28 EU states, including small, low-tax countries like which have benefited by allowing multinationals to book profits there on digital sales to customers elsewhere in the

The European Union's current Austrian presidency has been trying to reach a deal on the tax by the end of the year. The proposal calls for a deal by March.

The setback is a painful blow to French Emmanuel Macron, as his government had invested considerable political capital in the tax. It is also seen in as a useful example of action before EU next year.

(Reporting by Leigh Thomas, editing by Ed Osmond)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Tue, December 04 2018. 16:28 IST