Google faces threat of ad revenue tax in France

Google may be taxed on its advertising revenues in France due to new government regulations.

The French president Nicolas Sarkozy’s initiated a report with the aim introducing regulations on the internet, which has proposed that search companies pay a tax levy every time a user clicks on a banner ad or sponsored link.

The new report, which was presented to the culture minister Frederic Mitterrand, could also have an impact Yahoo! and Microsoft, according to reports.

If the advertising tax is introduced, the revenue generated would be used to finance creative schemes.  It is thought that Google’s annual ad revenues reach around £720 million in France alone.

The report suggested that the money could be put towards government-funded schemes such as the digital subscription for young people to download music cheaply, which has been introduced to reduce illegal downloading, according to the Daily Telegraph.

However, in response to the report, Google France has said that a tax on online advertising would only “slow down innovation” and the best way “to support content creation is to find new business models that help consumers find great content and rewards artists and publishers for their work”.