France angers Trump with 3% tax on large digital firms

Lester Mason
July 14, 2019

The move was applauded by the Computer & Communications Industry Association which said the French law would retroactively require U.S. internet giants to turn over a percentage of their revenues from the start of 2019.

Other EU nations including Austria, Britain, Spain and Italy have additionally reported plans for their very own digital taxes.

'I want to tell our American friends that this should be an incentive for them to accelerate even more our work to find an agreement on the worldwide taxation of digital services, ' he said. The tax will hit about 30 companies, including major Irish employers Apple, Facebook and Google.

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 national proposals come after an EU-wide effort to pass a digital tax on corporations failed past year, thanks to resistance from countries like Ireland and the Netherlands. When in place, the proposed United Kingdom digital services tax will target "large digital businesses" that generate more than £500m in global revenue and more than £25m in United Kingdom revenue, upon which it will impose a 2% levy.

The tax amounts to a 3% annual levy on the French revenues of digital companies with yearly global sales worth more than 750 million euros ($844 million) and French revenue exceeding 25 million euros.

"We must act against the perverse effects of a regulatory and fiscal framework that allow digital giants to grow without any limits and without any control", French Finance Minister Bruno Le Maire said when he introduced the bill earlier this year.

The tech industry is warning that consumers could pay more.

G20 finance ministers in June broadly supported a plan developed by the Organization for Economic Cooperation and Development to overhaul global corporate tax rules and address challenges in taxing digital companies. In the first quarter of this year, for instance, Amazon's share of French e-commerce went down slightly, but the American retail behemoth still controlled no less than half of France's online trade.

France has approved a digital services tax despite threats of retaliation by the US, which targets American tech giants.

"France is a sovereign state and it alone decides on its taxation mechanisms and it will continue to do so", he said.

"Countries are sovereign on tax matters". 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.

Other reports by Iphone Fresh

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