France’s digital tax is at the center of a dispute with the United States.
The Trump administration threatened to increase tariffs up to 100 percent on French goods, including wines and handbags, after the French government created a new tax late December 2019 that would hurt U.S. businesses.
The tax would make about 30 big tech companies—including Google, Facebook, and Amazon—pay a 3 percent tax of their revenue in France. Most of the companies the tax applies to are based in the United States.
Last year, Amazon declared that the 3 percent tax will be included in purchases, meaning the tax would be paid by their French customers.
“It was suggested that this tax would be paid for by businesses, which would have corrected their taxation. In reality, it is more complex: businesses collect the tax and pass it on to their consumers,” Nicolas Marques, Institute Molinari’s think tank director, told NTD.
According to Marques, as the internet giants are leaders of digital, it’s very easy for those companies to choose how they will pay this tax and who will pay it.
A U.S. government report from December 2019 focuses on determining whether or not the digital tax is “discriminatory.” The United States says the tax is specifically targeting American companies.
According to the report, the wording used by the French administration refers to all digital companies, and does not specify American companies.
“The digital tax is the only tool the French politicians have found to compete with American companies, it’s a populist promise,” fiscal lawyer Jean Philippe Delsol said.
“They make American companies look bad and this is a narrative aiming to trigger bad feelings from French people”.
France said the digital tax will provide $500 million euros to the French government.
U.S. Treasury Secretary Steven Mnuchin and his French counterpart, Bruno Le Maire, are trying to find a compromise before meeting at the World Economic Forum in Davos, Switzerland, next week.
Reporting by David Vives in France.