Brussels: Google, Facebook and Amazon could be made to pay a “fair” share of tax under new European Union proposals on digital companies.

The European Commission has called for large technology companies to pay a three per cent tax if they make money from user data or digital advertising in a country, regardless of their bricks-and-mortar presence — primarily targeting social media companies that are making money through user data and content. European leaders have begun discussing the plans, opening a fractious debate about how to capture revenue from tech giants and digital firms.

France has led the charge for a digital tax, sometimes nicknamed the Gafa tax, after Google, Apple, Facebook and Amazon. The digital tax plans have been in the works for months, before regulators asked Facebook to explain a data breach affecting 50 million profiles.

The commission has rejected claims that the plan was targeting US companies.

“This is not an anti-American tax, this is not an anti-Gafa tax, this is a digital tax,” said Pierre Moscovici, the European commissioner for tax, who said 150 firms would be affected, including European, American and Asian ones. The commission believes the tax will generate €5 billion for European treasuries annually.

The growing dominance of digital companies is seen as a long-term threat to Europe’s tax base. The commission estimates that digital businesses pay an effective average tax rate of only 9.5 per cent, compared with 23.2 per cent for bricks-and-mortar firms.

— Guardian News & Media Ltd