The big tech tax bombshell just got real, as Europe moves to hammer firms like Amazon, Facebook, and Google

Reuters

French President Emmanuel Macron and Mark Zuckerberg, the CEO of Facebook.

• The prospect of big tech firms, including Amazon, Apple, Facebook, and Google, paying billions of dollars more in tax in Europe got more real on Thursday.
• France pushed forward with plans to tax the revenue of internet giants, with a bill that could generate $563 million more in income for the French government being passed by lower parliament.
• The UK is considering similar proposals and Boris Johnson, the man most likely to be Britain's next prime minister, indicated his support for the idea.
• "We've got to find a way of taxing the internet giants on their income, because at the moment it is simply unfair," Johnson said.
• Visit Business Insider's homepage for more stories.

Plans to make the big tech firms pay billions of dollars more in tax in Europe took significant strides forward on Thursday.

In France, the country's lower parliament passed a pioneering bill aimed at taxing the revenues, rather than the profits, of companies including Amazon, Apple, Facebook, and Google, AP reports.

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Meanwhile, the favorite to become Britain's next prime minister, Boris Johnson, indicated his support for similar proposals in the UK, where there is growing anger about the amount of tax paid by giant US corporations.

The idea of a tax on revenues is designed to combat the complex arrangements most US tech firms have in place to avoid paying high tax bills.

Tech firms do this by routeing their sales through a subsidiary in a country with lower taxes, such as Ireland. Their subsidiaries report revenue based on services provided to the parent company, resulting in drastically lower revenue and profit, and, therefore, lower corporation tax.

Read more: Tech's tax bombshell: Internet giants face billions more in taxes in Europe as regulators demand 'justice'

To close this loophole, France plans to tax the French sales of digital companies with global revenue of more than €750 million ($844 million) and French revenue of over €25 million ($28 million). The country estimates that this could raise about €500 million ($563 million), for the public purse every year.

The bill proposing the tax was approved by France's lower house of parliament on Thursday. It will be put before the Senate next week, where it is expected to be rubber-stamped, AP reports.

Bruno le Maire, the finance minister in President Emmanuel Macron's government, said in March that the tax was about "justice."

"These digital giants use our personal data, make huge profits out of these data," and "then transfer the money somewhere else without paying their fair amount of taxes."

Getty

Boris Johnson, the man most likely to be Britain's next prime minister.

Elsewhere on Thursday, the man most likely to be Britain's new prime minister signaled that he will get behind similar proposals currently under consideration in the UK.

In October, Chancellor Philip Hammond said the UK would tax 2% of British user-generated revenue in a new "digital services tax," which could bring in up to £400 million ($502 million), a year for the Treasury.

Johnson appears to like the idea.

"It's deeply unfair that high street businesses are paying tax through the nose ... whereas the internet giants, the FAANGs - Facebook, Amazon, Netflix and Google - are paying virtually nothing," he said at a leadership event, according to Reuters.

"We've got to find a way of taxing the internet giants on their income, because at the moment it is simply unfair."

Johnson's words were welcomed by Damian Collins, the British lawmaker who has been relentless in holding Facebook to account for the Cambridge Analytica data breach. "The big tech companies should pay a level of tax that directly relates to the huge value of the business they do in the UK," he tweeted on Friday.

Support for a tax on big tech runs across party lines as well.

Labour leader Jeremy Corbyn tweeted at snarky happy 25th birthday message for Amazon on Friday. He was pictured signing a card, which contained the message: "You owe the British people millions in taxes that pay for the public services that we all rely on. Please pay your fair share."

Both France and the UK have said they hope their plans will appeal to other countries. There are ongoing talks among the G20 and the Organization for Economic Cooperation and Development to reform the way the companies are taxed.

Big tech firms have unsurprisingly bristled at the notion of paying billions more in tax. At the time Chancellor Philip Hammond announced his vision, TechUK - the British lobbying group that counts Facebook, Amazon, and Google among its members - said: "The kind of tax being proposed will be bad for investment and bad for the UK economy."