On Monday April 8th, French lawmakers approved a new tax on digital giants such as Google, Amazon, Facebook, Apple and Microsoft that has firmly disturbed the United States.
Finance Minister Bruno Le Maire boasted that France was proud to be in the vanguard of such a move…The measure was approved by 81 votes for and 7 against the bill in the National Assembly, with 43 abstentions. (for the results details e.g.http://www2.assemblee-nationale.fr/scrutins/detail/(legislature)/15/(num)/1833)
In the process of the parliamentary shuttle, the Tax bill is now in its way to be put to vote in the Senate, (known as the upper house), before becoming law.
This tax bill is aimed to accelerate the negotiations that are underway for an international digital tax at OECD level, which would substitute national taxes. "France is honoured to be leading on such subjects," Le Maire told parliament before the vote, saying that the draft constituted a "step... towards a fairer and more efficient taxation for the 21st century."
Last month, France unveiled this draft legislation to set a three percent tax on digital advertising, the sale of personal data and other revenue for any technology company that earns more than €750 million (US$840 million) worldwide each year.
Tech companies currently avoid paying high taxes by registering in low-tax countries such as Ireland. This tax comes as result of the unability of the European Union to implement taxation as a solid legislative structure. The Organisation for Economic Cooperation and Development (OECD) is working on a draft deal, which it says will be officially ready next year.
At the moment, other European countries are considering implementing their own Gafa national taxes bill, including Britain, Spain, Austria and Italy.
NATO MINISTERIAL MEETING THIS WEEK
The US State department said Thursday 11th that Pompeo had evoked the tax after speaking with French foreign minister Jean-Yves Le Drian on the sidelines of a Nato ministerial meeting in Washington.
The US has urged its NATO ally to drop the plan, with US Secretary of State Mike Pompeo warning that it would hurt both the American tech companies and the French citizens who use the platforms.
"Secretary Pompeo urged France not to approve a digital services tax, which would negatively impact large U.S. technology firms and the French citizens who use them," the State Department said in a statement.
Responding to the criticism from the United States, Le Maire said France was "determined" to press on with the legislation and would be "sovereign" on fiscal issues.
He said it was "unacceptable" that digital giants could make considerable profits from user data so that the "profits are made in France but the taxes are imposed abroad".
OECD IS THE KEY
France is seeking to agree the legislation on a national level after a European Union-wide effort was scuttled by low-tax countries such as Ireland, which have wooed big technology firms.
But Le Maire insisted that a "good solution in the long term will be a multilateral solution," vowing not to let up in efforts for an agreement within the Organisation for Economic Cooperation and Development (OECD).