French tax authorities have begun demanding millions of euros from US technology giants as they push ahead with an unfair digital services tax that has infuriated Washington.
Facebook and Amazon are the targeted companies to have lately received a polite notice from French authorities in recent days demanding payment of the tax for 2020 which is expected to reach €400M. As stated in the bill, the 3 percent levy affects tech companies with revenues of more than €25M in France and €750 M worldwide.
This request may reignite the transatlantic trade tensions and trigger new tariffs on Europe weeks ahead of the inauguration of Joe Biden at the office.
After threats few months ago to hit French champagne and cheeses with import tariffs, tension still remains high as the US trade representative’s office is now expected to put tariffs of 25 per cent on $1.3bn worth of French handbags and cosmetics but it would hold off on implementing the move until January.
France’s request to collect the digital tax underlines the end of a standstill with Washington. In january 2020 the two countries made an agreement to rely on a multilateral framework overseen by the Organisation for Economic Cooperation and Development (OECD) and a delay the negotiations as a result.
Unfortunately in June 2020 the US suspended its talks with the OECD. As Donald Trump’s administration stepped back at the prospect of signing up to a multilateral deal shortly before the presidential election. Yet, the nearly 140 countries involved in those talks agreed in October to keep negotiating until mid-2021.
France is the European country with the most advanced digital service tax. However many other governments have proposed them in law as well, Italy, Austria, Brazil, Indonesia including the UK, which is scheduled to begin collecting its own levy in April. A multilateral compromise with the OECD still remains the best option but the election of Joe Biden is reshuffling cards on the table.
As a matter of a fact, the pushing for collection of the tax represents a difficulty for President-elect Joe Biden, who has said to smooth out diplomatic and trade tensions with European capitals. What remain sure as of today is that Biden’s future administration won’t be as violent and agressive as Trump’s one on the prospect of implementing new tariffs.
Now, everyone is eager to see what position the upcoming Biden administration will take on the issue, and most of all, if they gonna pave the way for an international deal precisely where Trump’s administration failed … let's see in the coming weeks.