French tech tax inflames tensions with US

Remigio Civitarese
Luglio 14, 2019

The digital tax will not apply to small businesses or those making a loss, protecting start-ups that are financially more volatile.

The French digital tax is the first in Europe, but Great Britain, Spain and Austria are also developing similar policies. "France is unlikely to be alone", Yueh said.

The United States have threatened with reprisals before, as it believes the law would be mostly aimed at American companies (as suggested by the nickname "GAFA tax", meaning Google, Apple, Facebook and Amazon).

But the French move drew an angry response from the White House even before the legislation was passed, with Trump ordering an investigation unprecedented in the history of French-US relations.

The proposed 3% tax on French revenue of large internet companies is expected to pass the French Senate and could yield €500m (£450m) a year. Le Maire said France will abolish the digital tariff once there are multilateral agreements to tax tech giants globally.

The adoption of the law came as Britain unveiled draft legislation for a tax on digital giants, that would amount to 2.0 percent and reflect "the value derived from their United Kingdom users", the British government said.

The tech industry is warning that consumers could pay more.

The proposed tax was first mentioned in the October budget after concerns were raised that tech giants don't pay enough tax in the United Kingdom, in comparison to United Kingdom companies.

Tech giants face payments in the tens of millions under the measure.

But the lawmakers noted that France is a sovereign state which can not be dictated to how to operate and how to handle businesses taking part within its territories.

Many global tech companies pay taxes in the countries where their headquarters are based, rather than where they generate sales.

Giuseppe de Martino, president of ASIC, said: 'By wanting to overtax unilaterally American companies, Bruno Le Maire has triggered a trade war that penalises the French tech today and will penalise tomorrow many sectors that make the success of the French economy, including wine, cars, and luxury goods'.

The Computer & Communications Industry Association on Wednesday applauded the US Trade Representative's move, saying the tax would retroactively require US internet giants operating in France to turn over a percentage of their revenues from the beginning of this year and violates worldwide trade commitments. The French government said that this is a temporary measure that will be applied until the European Union and wider world can reach an agreement on how to tax major tech companies more effectively.

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