France faces legal threats over digital tax


The final vote in favor of the tax in the French Senate came hours after the Trump administration announced an investigation into the tax under the provision used past year to probe China's technology policies, which led to tariffs on $250 billion worth of Chinese imports.

The decision to press forward with the plans arrives despite the hostility France has received from the USA after it recently announced similar digital tax plans.

'I want to tell our American friends that this should be an incentive for them to accelerate even more our work to find an agreement on the worldwide taxation of digital services, ' he said. Always eyeing a catchy slogan, he prefers to call his levy a tax on "Fangs", an acronym for Facebook, Amazon, Netflix and Google. The French government has indicated it will drop the measure once the OECD reaches agreement on global plans for overhauling cross-border tax rules for the digital economy, although these are not expected until 2021. Ireland is among the countries that blocked a European Union wide tax, before France pressed ahead on its own. On Thursday, France passed a law imposing a 3 per cent charge on the total annual revenues of the largest technology companies providing goods and services to French consumers.

The proposed three percent tax on total annual revenues of companies providing services to French consumers only applies to the largest tech companies, "where U.S. firms are global leaders", the trade representative's office said.

The proposed tax was first mentioned in the October budget after concerns were raised that tech giants don't pay enough tax in the United Kingdom, in comparison to United Kingdom companies. Taxing revenue is meant to counter the complex arrangements most USA tech firms have in place to avoid paying high taxes on their profits. France's finance ministry aims to raise up to 500 million euros ($562 million) annually from the measure by 2020.

"We have made a decision to put in place an eco-tax on all flights from France", Ms Borne said during a news conference on Tuesday. Tech companies like Amazon disputed France's tax on Thursday arguing for a multilateral approach instead. Robert Lighthizer, the US trade representative, said: "The US is very concerned that the digital services tax which is expected to pass the French Senate tomorrow unfairly targets American companies". This causes problems for countries such as France and the United Kingdom, where huge sales are made but governments see very little of this money returned in tax.

But, she added, other countries are already looking at new taxes on big tech companies.

'The UK has always sought to lead in finding an global solution to taxing the digital economy, ' claims Financial Secretary to the Treasury and Paymaster General Jesse Norman.