France imposes digital tax on Google, Apple, Facebook, Amazon, Trump orders investigation

The French Parliament has adopted, by a final vote of the Senate, the introduction of a tax on `GAFA’, making France one of the first countries to impose a tax on digital giants. The GAFA tax refers to an acronym for Google, Apple, Facebook and Amazon just as President Donald Trump has ordered an investigation into the tax. The digital tax is endorsed by the opposition-controlled upper house, paving the way to the eurozone second largest power to unilaterally tax internet giants by three per cent on much of their digital sales in France. This is related to advertising, websites and the resale of private data.

The tax was initially adopted by the National Assembly, the lower house of parliament, on July 4.

GAFA targets digital companies with global annual sales of more than 750 million euros ($845.6 million) and sales in France of at least 25 million euros. Introduced in France from Jan. 1, this three per cent tax on digital gross sales would help to collect 400 million euros this year and 650 million euros by 2022.

Meanwhile President Donald Trump has ordered an investigation into France’s proposed tax on technology companies. The US said it was “very concerned” by the planned digital service tax, a move which could see the States retaliate by imposing new tariffs or other trade restrictions.

In a statement announcing the investigation, US trade representative Robert Lighthizer said there were concerns the tax “unfairly targets American companies”. The proposed three per cent  tax on French revenue of large internet companies is expected to pass the French Senate and could yield €500m (£450m) a year. It would target companies with at least €750m (£675m) in annual revenues and apply to revenue from digital business, such as online advertising.

Companies including Google, Apple, Amazon and Facebook would likely be affected. The United States Trade Representative (USTR) said in a statement “services covered are ones where US firms are global leaders. “The structure of the proposed new tax as well as statements by officials suggest that France is unfairly targeting the tax at certain US-based technology companies.” Mr Lighthizer said the US president had directed the investigation find out whether the tax is “discriminatory or unreasonable and burdens or restricts United States commerce”. Previous investigations by the US have included Chinese trade practices and EU subsidies on large commercial aircraft. The tax would hit some 30 companies, many of which are American, but also Chinese, German, Spanish and British companies.

One French firm and several firms with French origins that have been taken over by foreign companies will also be included in the tax plans. Technology industry lobby group ITI has urged the US not to impose tariffs in retaliation. “We support the US government’s efforts to investigate these complex trade issues but urge it to pursue the 301 investigation in a spirit of international cooperation and without using tariffs as a remedy,” Jennifer McCloskey, ITI’s vice president of policy, said. But the investigation was praised by Senate finance committee chairman Chuck Grassley and Democrat Senator Ron Wyden. In a joint statement, they said: “The digital services tax that France and other European countries are pursuing is clearly protectionist and unfairly targets American companies in a way that will cost US jobs and harm American workers.

“The United States would not need to pursue this path if other countries would abandon these unilateral actions and focus their energies on the multilateral process that is under way.”

Categories: Business,Economy,News

Comments are closed