France to explore "Google tax" to pay creative work

Thu Jan 7, 2010 2:51pm EST
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By Sophie Hardach

PARIS (Reuters) - French President Nicolas Sarkozy said on Thursday that he wanted the authorities to explore whether online advertising revenues of major search engines could be taxed in France as well as their home countries.

Speaking to leaders and representatives of the arts and entertainment sector, he also said he wanted the country's antitrust body to rule on whether Google enjoys a dominant market position in online advertising.

"For the time being, these companies are taxed in the country in which they are headquartered even though they make up a big part of our advertising market," he said.

Sarkozy's comments followed a media report saying France could start taxing Internet advertising revenues from online giants such as Google, using the funds to support creative industries that have been hit by the digital revolution.

The proposal, put forward in a government-commissioned survey, is France's latest challenge to the virtual free-for-all for Internet content.

The country has caused controversy in the past with some of the world's harshest laws on online piracy.

The levy, which would also apply to other operators such as MSN and Yahoo, would put an end to "enrichment without any limit or compensation," Liberation quoted Guillaume Cerutti, one of the authors of the report, as saying.

It would apply even if the operator had its offices outside France, as long as the Internet users who click on ad banners or sponsored links are here, the paper said.   Continued...

<p>Customers look at computers in the French FNAC department store in Nice, southeastern France, February 27, 2009. REUTERS/Eric Gaillard</p>