Google, Facebook, Amazon decry French digital tax as 'discriminatory'
Google, Facebook, Amazon decry French
digital tax as 'discriminatory'
Virginie MONTET August 19, 2019
President Donald Trump is considering retaliating against the
tax -- approved July 11 -- with punitive tariffs on French wine imports,
prompting an investigation by the Office of the US Trade Representative (USTR).
The so-called GAFA companies appeared at a USTR hearing on
possible countermeasures and were unanimous in their complaints, calling the
tax a "troubling precedent."
The tax, which Washington considers unfair, adds yet another
bone of contention to the transatlantic trade disputes that now also include
steel, aluminum, automobiles, aircraft and agriculture.
The proposed three percent tax on total annual revenues of
companies that provide services to French consumers applies only to the largest
tech companies, which are mostly US-based.
For Amazon, where France represents the second largest European
market for e-commerce, the levy "creates a double taxation," said
Peter Hiltz, director of tax planning for the online retail giant.
Some 58 percent of Amazon's sales are through partner companies,
which stand to take the hit.
The tax "negatively impacts Amazon and thousands of small
and medium businesses," Hiltz said.
"Amazon cannot absorb the expenses," and the company
"already informed partners that their fee will increase starting October
1," he added
Some internet heavyweights have taken advantage of low-tax
jurisdictions in places like Ireland while paying next to nothing in other
countries where they derive huge profits.
The United States has been pushing for an overarching agreement
on taxation of digital commerce through the Group of 20 economic forum, but
France pressed ahead on its own.
It is "an imperfect solution to address an outdated tax system,"
said Jennifer McCloskey of the Information Technology Industry Council, which
supports a multilateral agreement under the auspices of the Organization of
Economic Cooperation and Development.
Hiltz agreed, saying the companies believe "an international
agreement under the OECD is reachable."
The tax will apply to about 30 companies with at least $28
million (25 million euros) in sales in France and $831 million worldwide.
But it does not apply to other internet operators like media
companies.
The tax touches "a handful of internet business when every
sector is becoming digital," Google's Nicholas Bramble said at the
hearing.
Taxing only this part of the industry "doesn't make
sense."
The companies also complained that the tax is retroactive, since
it will apply from the beginning of 2019 -- something they have "never
seen" before, according to Alan Lee of Facebook.
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