France Passes Tax on Big Tech Companies Despite US Pressure By Phillip Howard
The French Senate recently passed a tax on digital companies that will affect big U.S. tech companies (Google, Amazon, Facebook, and Apple) known in France as “Les GAFA.” According to French lawmakers, the tax was passed in response to frustration over digital companies establishing their European headquarters in countries that offer low corporate tax rates.
The new law will levy a 3 percent tax on earned revenue by digital services in France by companies that make more than $28 million USD in French revenue and $844 million USD in global revenue. The tax will be retroactively applied from January of this year. Back in December of last year, French President Emmanuel Macron said in a statement that “large companies that make a profit in France must pay the tax.”
France has faced increased U.S pressure to abandon the tax before facing their own penalties. In a statement about the new tax, U.S. Trade Representative Robert Lighthizer said “the United States is very concerned that the digital services tax…unfairly targets American companies” and that an investigation will be launched by the White House in order to determine the effects of the legislation.
The tax has also received criticism from the U.S. companies most affected by its passing. Amazon said in a statement that they “applaud the Trump Administration for taking decisive action against France and for signaling to all of America’s trading partners that the U.S. government will not acquiesce to tax and trade policies that discriminate against American businesses.” Google also added that it supports a “comprehensive and multilateral” agreement instead of what it deems as “discriminatory unilateral taxes.” Facebook and Apple have yet to comment.
The passing of the tax has also led other European nations to do the same. Currently Austria and Poland are pursuing their own versions, while the United Kingdom is facing its own pressure from the U.S. on passing its own version as well.
In responding to the threats from the United States, French finance minister Bruno Le Maire stated that “France is a sovereign state, it decides its fiscal provisions in a sovereign manner, and it will continue to decide its tax decisions in a sovereign manner.” Le Maire believes “that between allies we should and we can settle our differences by other means than threats.”
Phillip Howard is a graduate student at Utica College