US major internet tech companies will be affected by French new digital tax regulation. (Getty Images/AFP/Lionel Bonaventure)

Digital Tax on Tech Giants Passed, France Defying US Trade Threats

Kinanty Nadia Putri
Politics & Economic
Economic
Jul 12, 2019
1681
As internet technology is becoming a major industry in recent years, France has long argued that taxes should also be based in digital not only physical presence. Now, the country’s plan has come to the realization after the French Senate approved the new tax regulation on Thursday (7/11).

Under the regulation, digital tech companies with revenue more than US$850 million, which at least US$31 million of it generated in France, will be subjected to the 3% tax based on sales made in the country. The tax will apply to roughly 30 companies, mostly from the US, such as Google, Facebook, Amazon, Apple, Microsoft, and Alphabet. Other companies from China, Spain, Germany, Britain, and even France are also affected.

French Finance Minister Bruno Le Maire said the tax would raise up to US$565 million per year.

The implementation of this digital tax is because most of the companies which headquarters are outside France only pay little or even no corporate tax to the country. Due to no large physical presence, the companies declare their profits to the country where they are headquartered.

Knowing most of its companies will be taxed, Trump’s administration has warned that the regulation is unfair. The US government will further investigate the French’s tax regulations, seeing if it is given a burden or restriction to US commerce.

While Amazon showed its appreciate attitude toward Trump administration for taking decisive action against France, in a statement. The retail giant also called the tax as ‘discriminatory’ and ‘poorly constructed’ that would cause significant harm to American and French consumers.

French tax will possibly lead to tax retaliation on French goods, however, Le Maire said the two countries can find agreements instead of imposing trade threats to deal over the internet giants taxation.

After all, France is a sovereign country that has a right to decides its tax rules, he added.

Source: https://www.bbc.com/news/world-europe-48947922

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