France Moves to Tax YouTube, Dailymotion to Pay for Arts Programs

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Late last week, France took the first step in creating a tax on online video sites. Under the duty, dubbed the "YouTube tax," sites that show ads on both free and premium video, such as YouTube and Dailymotion, would be taxed 2 percent of their ad revenue. The tax is much higher—10 percent—for video that's pornographic or could incite violence. The tax would apply to ad-free sites like Netflix, as well, which would pay based on their subscription revenues. The tax includes a provision to limit the amount paid by smaller sites. The bill was passed by the lower house of the French legislature.

Proceeds from the tax would go to local artists: The first €70 million would be dedicated to the National Film Board, with any funds above that going to the state budget.

The bill hasn't become law, yet: The French Senate will look at it in the fourth quarter of the year. If it passes there, the European Union needs to give its blessing.

The tax is a move to generate revenue from the largest online sites, such as Google, Amazon, Facebook, and Apple, which France believes don’t pay enough in taxes. Similar efforts to create a tax in 2010 failed.

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