November 14, 2018 / 7:06 AM / a month ago

Germany's Merkel sees digital tax proposal by December: media report

BERLIN (Reuters) - German Chancellor Angela Merkel said a European Union digital tax would be proposed at a meeting of EU finance ministers in December at the latest.

German Chancellor Angela Merkel addresses the European Parliament during a debate on the future of Europe, at the European Parliament in Strasbourg, France, November 13, 2018. REUTERS/Vincent Kessler

“We are talking about it with France. But note: We are not talking about whether to tax digital companies, we are talking about how to do that,” Merkel told German online portal t-online.de in an interview published late on Tuesday.

“There will be a proposal by December,” she said.

France has long been the main supporter of the tax but has grown increasingly frustrated with German hesitation over the details after Berlin agreed in principle to the idea in June.

After months of tough lobbying, the French government has said that only Denmark, Sweden and Ireland remain opposed.

Germany said this week it favored the proposed EU plan to tax big internet firms such as Google (GOOGL.O) and Facebook (FB.O) on their turnover, which EU officials say unfairly pay less tax than other companies.

Merkel’s comments came as Germany’s cabinet prepares to present an artificial intelligence (AI) strategy to help Europe’s biggest economy adjust to the digital era.

According to a draft paper seen by Reuters, the German government has set aside around 3 billion euros ($3.39 billion)for AI research and development.

“Our future prosperity depends very much on this, as does the question whether and how we can defend our European values regarding the dignity of individuals and protection of privacy in a digital age,” Merkel told t-online.de.

Germany has been at the forefront of industrial innovation for decades but policymakers have been late to realize that its export model, based on traditional manufacturing, is vulnerable and it is struggling to catch up.

Solid growth - the economy is in its ninth year of expansion - has left many businesses too busy meeting orders to have time to plan for a digital future.

($1 = 0.8855 euros)

Reporting by Maria Sheahan; Editing by Paul Tait

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