Monday, 14 October 2019
Latest news
Main » U.S. to hold hearing on French tax investigation Aug. 19

U.S. to hold hearing on French tax investigation Aug. 19

14 July 2019

The law will levy a 3.0 percent tax on revenues generated from services to French consumers by the largest tech firms.

"France is a sovereign country, its decisions on tax matters are sovereign and will continue to be sovereign", said French Finance Minister Bruno Le Maire. "I profoundly believe that between allies we can and should resolve our differences through means other than threats", he said, per Reuters.

France's Finance Minister Bruno Le Maire sent a clear message to the USA and the rest of the world on Thursday when the country passed a 3% tax on the digital revenues of big tech companies: "France decides its own tax rules". And a bigger dispute is unfolding about the very nature of national taxation regimes in an increasingly digitalised world. Political pressure to respond has been growing as local retailers in high streets and online have been disadvantaged.

For comparison, Apple raked in more than $13 billion in sales in Europe in the first-quarter of the year, while Facebook's European revenues were $3.65 billion during that period.

More news: Sudan military stop attempted coup, arrest involved security officers

And as more trade migrates to online platforms, there is no question that the USA retail giants are in a position to consolidate their advantage.

They say a levy is needed because big, multinational internet companies such as Facebook and Amazon are now able to book profits in low-tax countries like Ireland, no matter where the revenue originates. The new tax could be one more point of tension at upcoming G-7 meetings in France.

An activist wearing a mask depicting Facebook chief executive Mark Zuckerberg in Belgium previous year.

The tax is expected to raise about €180m ($202m; £162m) from 2020, said Transport Minister Elisabeth Borne. These companies, protesters claimed, were destroying the country's traditional family-run shops.

More news: Jenelle Evans allegedly ‘fabricated’ David Eason dog killing ‘for publicity’

And Britain will follow.

Both pieces of legislation apply only to the biggest tech companies, many of which are American.

The tax set to affect 30 companies headquartered in USA is expected to be signed into law by President Emanuel Macron, to whom taxing has been a priority, soon.

Britain and the United States could be on a collision course over taxing internet giants.

More news: Super 30 Day 2 in overseas

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. The Organization for Economic Cooperation and Development (OECD) is now reviewing steps to modernize the tax system for the digital economy but has said it won't reach a conclusion until 2020.

U.S. to hold hearing on French tax investigation Aug. 19