September 6, 2017 / 4:05 PM / a year ago

French government warns mobile operators on press tax loophole

PARIS, Sept 6 (Reuters) - The French government will close a tax loophole allowing mobile phone operators to apply a reduced value added sales tax rate, the budget minister said in an interview published on Wednesday.

As a measure to support the press, a special 2.1 percent VAT tax is applied to newspapers in France instead of the normal 20 percent rate.

SFR and Bouygues Telecom recently started offering access to newspapers as part of some subscriptions for mobile phone and internet access and are charging the reduced rate on a large part of the subscription.

“Mobile phone operators will not be allowed to apply reduced VAT rates except for the part covering the press,” Budget Minister Gerald Darmanin told Le Point magazine.

Darmanin said the new rules would be spelled out in the 2018 budget bill due to be presented at the end of the month.

He said that estimates that the state could miss out on up to one billion euros ($1.19 billion) in revenue if the four operators used the reduced rate were exaggerated, but added that the state could nonetheless not ignore such loopholes at a time when it is trying to rein in the public finances.

“Operators have been warned about the government’s position and must comply as quickly as possible,” he said.

SFR declined to comment and Bouygues Telecom said that they would respect the rules.

$1 = 0.8376 euros Reporting by Yann Le Guernigou; writing by Leigh Thomas; editing by John Irish

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