This article is from the source 'guardian' and was first published or seen on . It last changed over 40 days ago and won't be checked again for changes.

You can find the current article at its original source at https://www.theguardian.com/world/2019/jul/11/france-us-tax-big-digital-companies-donald-trump-amazon-facebook

The article has changed 5 times. There is an RSS feed of changes available.

Version 1 Version 2
France hits back at US over tax on digital giants France hits back at US over tax on digital giants
(about 4 hours later)
France has hit back against US plans to investigate a planned tax on big digital companies, saying it was free to decide how it applies taxes as a sovereign country. France has hit back at a US investigation into a new French tax on internet giants, saying “threats” were not the way allies should resolve disputes.
On Wednesday, Donald Trump ordered an investigation into the French tax, an inquiry that could lead to the US imposing tariffs or other trade restrictions. The French parliament approved a law on Thursday that would make France the first major economy to impose a tax on internet heavyweights.
The move opens a new trade dispute with a European ally and comes as the French Senate prepares for a final vote on the tax on Thursday. Dubbed the GAFA tax – an acronym for Google, Apple, Facebook and Amazon – the legislation will impose a 3% levy on total annual revenues of the largest tech firms providing services to French consumers.
“For us, [the tax] is totally compliant with international agreements. Countries are sovereign on tax matters. So for us it is inappropriate to use a trade instrument to attack a sovereign state,” a finance ministry source said. On Wednesday the law appeared to have opened a new front in a trade row between Washington and the EU when Donald Trump ordered an investigation into the tax, which could lead to the US imposing tariffs or other trade restrictions on France.
France pushed ahead with the tax after EU countries failed to agree a levy across the bloc in the face of opposition from Ireland and some Nordic countries. The French finance minister, Bruno Le Maire, responded when he addressed French senators on Thursday by saying: “Between allies, I believe we can and must resolve our differences in another way than through threats.”
That prompted countries including France, Austria, Britain, Spain and Italy to announce plans for their own tax at the national level. He added: “France is a sovereign country, its decisions on tax matters are sovereign and will continue to be sovereign.”
The UK chancellor, Philip Hammond, promised to introduce a digital sales tax in his budget last year to ensure that “global giants with profitable businesses in the UK pay their fair share”. Le Maire said he was warned about the investigation during a “long conversation” with the US Treasury secretary, Steven Mnuchin, this week. Le Maire said it was “the first time in the history of the relationship between the United States and France” that the US administration had decided to open such an investigation into French legislation.
He said earlier this year that a 3% tax on the French revenue of large internet companies could yield €500m (£450m) per year.
France has led a push for internet firms with significant digital revenue in the EU to pay more tax at source, but has made little headway as Germany is cool on the idea, while member states with low corporate tax rates such as Luxembourg and Ireland firmly oppose the proposal.
France has said it pressed on independently with its own tax because big internet companies such as Facebook and Amazon are able to book profits in low-tax countries no matter where the revenue originates from.
Paris has pledged to drop its tax as soon as an international agreement is reached at the Organisation for Economic Co-operation and Development to overhaul decades-old cross-border tax rules for the digital era.
Élysée officials have called the new tax “fair” and it has been held up by the government as a way to address calls for tax justice from gilets jaunes (yellow vests) protesters.
Le Maire has said the tax would target 30 companies, mostly American – including Google, Apple, Facebook and Amazon – but also Chinese, German, Spanish and British, as well as one French firm and several with French origins that have been bought by foreign companies. The tax would affect companies with at least €750m in annual revenues and apply to income from digital business including online advertising.
“We are merely re-establishing fiscal justice. We want to create taxation for the 21st century that is fair and efficient,” Le Maire told senators. “We want to impose on these new business models the same rules that apply to all other economic activities.”
The Paris-Washington digital tax spat is separate from an ongoing transatlantic trade row, but it could be used by Trump to try to obtain EU concessions on trade.
The US and EU have threatened to impose billions of dollars of tit-for-tat tariffs on planes, tractors and food in a nearly 15-year dispute at the World Trade Organization over aircraft subsidies given to the US planemaker Boeing and its European rival Airbus.
Trump has also imposed tariffs on imports of EU steel and aluminium – and has threatened punitive duties on cars and auto parts if the two sides fail to reach an overall trade deal.
Plans to open trade talks between Washington and Brussels have, however, been hampered by the US tariffs on steel and by EU states’ reluctance to include farm products in the talks.
The European commission has estimated that multinational digital companies with investments in the EU are on average taxed at a rate 14 percentage points below that of other firms.
Other countries have plans for their own taxes on digital giants.
The UK chancellor, Philip Hammond, promised to introduce a digital sales tax in his budget last year to ensure “global giants with profitable businesses in the UK pay their fair share”.
He said the UK could no longer wait for “painfully slow” discussions at international level and would instead introduce a 2% tax on certain types of sales, which he said would raise £400m a year.He said the UK could no longer wait for “painfully slow” discussions at international level and would instead introduce a 2% tax on certain types of sales, which he said would raise £400m a year.
France says the tax is needed because big internet companies such as Facebook and Amazon are able to book profits in low-tax countries no matter where the revenue originates from.
Paris has pledged to drop its tax as soon as an international agreement is reached at the Organisation for Economic Co-operation and Development overhauling decades-old cross-border tax rules for the digital era.
The French government says the tax does not specifically target US companies and will affect European and Asian firms as well. The tax will apply a 3% levy on revenue from digital services earned in France by firms with more than €25m (£22.5m) in French revenue and €750m worldwide.
FranceFrance
E-commerceE-commerce
US foreign policyUS foreign policy
Donald TrumpDonald Trump
EuropeEurope
InternetInternet
AmazonAmazon
newsnews
Share on FacebookShare on Facebook
Share on TwitterShare on Twitter
Share via EmailShare via Email
Share on LinkedInShare on LinkedIn
Share on PinterestShare on Pinterest
Share on WhatsAppShare on WhatsApp
Share on MessengerShare on Messenger
Reuse this contentReuse this content