News is surfacing that a report has been released & financed by the French government recommending that Google, Yahoo!, MSN and other big advertising companies be taxed on revenue made by online advertising.
The Zelnick Report says the tax would apply anytime an online ad or sponsored link is clicked in France and calls for a company to be taxed regardless of where it is based.
Dubbed the “Google Tax” it could raise up to the equivalent of $28 million US dollars for France.
So what’s the reason behind this tax?
Apparently there have been complaints from media companies that claim Google and other internet giants are profiting from their content for free. The proposed tax could be used to prop up creative industries that are having trouble keeping up with the digital world, such as musicians and newspaper publishers.
Of course, Google is none to happy with the proposal and has hit back. Google France’s Public Affairs Director Olivier Esper responded:
There is an opportunity here to promote innovative solutions, rather than extending the attitude of opposition between the internet world and the cultural world, for example through the approach of taxation.
If this tax is imposed, it is not yet clear what the ramifications will be for advertisers. I would expect that Google will pass on this tax to individual advertisers in some form.
There has been no timeframe on when the government will act on the report, but we will be sure to keep you posted on any future news.