Berlin is in discussions with Paris to establish a framework on how the likes of Amazon would pay a digital tax, proposed by the European Commission.
"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," the Chancellor told a German online portal in an interview published late on Tuesday.
"There will be a proposal by December," Merkel added.
Just last week, French Finance Minister Bruno Le Maire reaffirmed Paris's determination to slap a 3% digital tax on revenues by companies with a global annual turnover of 750 million euros and EU revenue of at least 50 million euros per year should be subject to the new levy. He also suggested Germany was interested in cooperating with France in order to "reach a decision together," and now it appears Mrs. Merkel has mirrored Le Maire's zest with a promise of a swift decision.
The EC's proposal for an interim tax which covers the main digital activities that currently escape tax altogether in the EU, has prompted a strong reaction across the pond. Washington politicians oppose an introduction of the digital tax and argue it is an unnecessary and repetitive measure, since the EU already has the VAT, a revenue tax based on the location of the customer.
Merkel's latest comments came as Germany government reportedly plans to spend 3 billion euros ($3.39 billion)for AI research and development to keep the nation up-to-date with digital innovation globally.
"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 said on Tuesday.
The EU's Economic and Financial Affairs Council is set meet on December 4, 2018.