France goes ahead with its plan to tax massive tech firms. The federal government has despatched out notices to tech giants, as reported by the Financial Times, Reuters and AFP. There may very well be retaliation tariffs on French items within the U.S.
For the previous couple of years, France’s Economic system Minister Bruno Le Maire has been pushing laborious for a tax reform. Many economic system ministers in Europe assume tech firms aren’t taxed correctly. They generate income in a single nation, however report back to tax authorities out of the country. They reap the benefits of nations with low company tax to optimize the underside line.
Le Maire first pitched the thought of a European tax on massive tech firms based mostly on native income. However he didn’t get assist from different European nations — European tax insurance policies require a unanimous choice from members of the European Union.
The French authorities chose not to wait for different European nations and began working by itself native tax. There are two necessities:
- You generate greater than €750 million in income globally and €25 million in France.
- And you’re working a market (Amazon’s market, Uber, Airbnb…) or an promoting enterprise (Fb, Google, Criteo…).
When you meet these two necessities, it’s important to pay 3 % of your French income in taxes.
On the similar time, the OECD has been engaged on a strategy to correctly tax tech firms with a standardized algorithm that will work throughout the globe. However OECD members have but to achieve a compromise.
France and the U.S. have been arguing on and off for the previous couple of years concerning the tech tax. In August 2019, then U.S. President Donald Trump and French President Emmanuel Macron reached a deal by promising that the French authorities would scrap the French tax as quickly because the OECD finds a strategy to correctly tax tech firms in nations the place they function.
In December 2019, the U.S. promised 100% tariffs on French wine, cheese and purses as a result of the earlier deal wasn’t ok. In January 2020, the 2 sides agreed to attend slightly bit extra to see if the OECD framework would come by means of.
And right here we’re. In line with the French authorities, OECD negotiations have failed so it’s time to start out accumulating the French digital tax. Let’s s see how the U.S. reacts in the course of the Trump-Biden transition.