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The Boston Globe

Business

Panel urges France to drop plans to tax Internet firms

PARIS — France should abandon its effort to unilaterally enact taxes on global Internet companies and should instead work at the international level to create a level playing field, according to a report from a government advisory committee.

The introduction of a digital tax “would be both unrealistic and economically devastating,” the French Digital Council said in a report delivered to President François Hollande’s government on Tuesday.

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Fleur Pellerin, the digital economy minister, asked the council in January to study tax policy for the digital economy. French political leaders, struggling to bring the country’s budget deficit into line with EU rules, have looked at companies like Google and Amazon, which make billions of dollars in France but pay almost no taxes, as a possible source of revenue.

The companies pay few taxes through legal, though sometimes questionable, practices like allocating profit to countries with lower taxes and exploiting regulatory differences between countries.

The council argued that the government’s efforts would be best deployed by working with the Group of 20 nations, the Organization for Economic Cooperation and Development, and the European Union to change the global rules in such a way as to ensure fairer taxation of multinational technology companies.

Going it alone at the national level, the council said, “could undermine France’s position in these talks.”

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