American tech giants Amazon, Facebook, and Google joined forces on Monday to decry the French digital tax as retroactive and discriminatory.
President Donald Trump is contemplating retaliating in opposition to the tax – authorised 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 firms appeared at a USTR listening to on attainable countermeasures and have been unanimous of their complaints, calling the tax a “troubling precedent.”
The tax, which Washington considers unfair, provides one more bone of rivalry to the transatlantic commerce disputes that now additionally embody metal, aluminium, vehicles, plane and agriculture.
The proposed three % tax on complete annual revenues of firms that present providers to French shoppers applies solely to the most important tech firms, that are largely US-based.
For Amazon, the place France represents the second largest European marketplace for e-commerce, the levy “creates a double taxation,” mentioned Peter Hiltz, director of tax planning for the net retail big.
Some 58 % of Amazon’s gross sales are by way of accomplice firms, which stand to take the hit.
The tax “negatively impacts Amazon and thousands of small and medium businesses,” Hiltz mentioned.
“Amazon cannot absorb the expenses,” and the corporate “already informed partners that their fee will increase starting October 1,” he added
Some web heavyweights have taken benefit of low-tax jurisdictions in locations like Ireland whereas paying subsequent to nothing in different nations the place they derive big income.
The United States has been pushing for an overarching settlement on taxation of digital commerce by way of the Group of 20 financial discussion board, however France pressed forward by itself.
It is “an imperfect solution to address an outdated tax system,” mentioned Jennifer McCloskey of the Information Technology Industry Council, which helps a multilateral settlement underneath the auspices of the Organization of Economic Cooperation and Development.
Hiltz agreed, saying the businesses imagine “an international agreement under the OECD is reachable.”
The tax will apply to about 30 firms with not less than $28 million (EUR 25 million) in gross sales in France and $831 million worldwide.
But it doesn’t apply to different web operators like media firms.
The tax touches “a handful of internet business when every sector is becoming digital,” Google’s Nicholas Bramble mentioned on the listening to.
Taxing solely this a part of the business “doesn’t make sense.”
The firms additionally complained that the tax is retroactive, since it is going to apply from the start of 2019 — one thing they’ve “never seen” earlier than, in keeping with Alan Lee of Facebook.