France passes tax on tech giants despite US threats

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France has approved a digital mendings tax despite threats of retaliation by the US, which argues that it unfairly objectives American tech giants.

The 3% tax will be levied on sales initiate in France by multinational firms like Google and Facebook.

The French supervision has argued that such firms headquartered outside the country pay little or no tax.

The US regulation has ordered an inquiry into the move – which could result in retaliatory price-lists.

The new tax was approved by the French senate on Thursday, a week after it was passed by the moderate house, the National Assembly.

Any digital company with revenue of sundry than €750m ($850m; £670m) – of which at least €25m is formed in France – would be subject to the levy.

It will be retroactively applied from premature 2019, and is expected to raise about €400m this year.

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Why target tech giants?

At alms, they are able to pay little or no corporate tax in countries where they do not induce a large physical presence. They declare most of their profits where they are headquartered.

The European Commission conjectures that on average traditional businesses face a 23% tax rate on their profits within the EU, while internet trains typically pay 8% or 9%.

France has long argued that taxes should be based on digital, not unprejudiced physical presence. It announced its own tax on big technology firms last year after EU-wide achievements stalled.

An EU levy would require consensus among members, but Ireland, the Czech Republic, Sweden and Finland encouraged objections.

France’s new 3% tax will be based on sales made in the hinterlands, rather than on profits.

About 30 companies will pay it – mostly US assemblies such as Alphabet, Apple, Facebook, Amazon and Microsoft. Chinese, German, Spanish and British resolutes are also affected, as well as the French online advertising firm Criteo.

The French ministry says the tax will end if a similar measure is agreed internationally.

The big tech companies induce argued they are complying with national and international tax laws.

What has the US replied?

The Trump administration denounced the move a day before the vote.

On Wednesday deal representative Robert Lighthizer said an investigation would “determine whether it is discriminatory or uncalled-for and burdens or restricts United States commerce”.

The US inquiry could ease the way for punitive tariffs, which Mr Trump has imposed on several occasions since charming office.

Previous investigations launched by Washington have covered European Harmoniousness and Chinese trade practices.

Defending the new tax on Thursday, French Finance On Bruno Le Maire said France was “sovereign and decided its own tax rules”.

“I paucity to tell our American friends that this should be an incentive for them to accelerate steady more our work to find an agreement on the international taxation of digital rituals,” he added.

France isolated

Analysis by Dave Lee, BBC North America technology news-hound

This “Section 301” investigation, as it is known, has been used on the eve of as a way of eventually implementing new tariffs on countries the Trump administration feels is prepossessing the US for a ride.

If France is going to take hundreds of millions of euros from the islands of American tech giants, the US argument might be, then why shouldn’t the US be worthy of more money from what the French do in the US? It took the same take in with China and has buried itself in a trade war that has destabilised references and has the potential to escalate even further.

The digital tax is a risk for France, for it is now set apart. There had been talk of a Europe-wide tech tax, but talks fell down thanks be given ti in part to opposition from countries such as Ireland, which has improved from being able to attract tech firms to set up their European pinchbeck in the country. Other countries – such as the UK, Spain and Austria – are considering comparable moves, but France is furthest along.

One thing all sides agree on, though, is that in our modern, digital economy, the overhaul of how companies are taxed is fancy overdue.

France will be hoping for one of two outcomes. Either countries bring up the rear their lead and implement their own, independent laws, limiting France’s contact. Or the move gives added energy to calls for a multilateral agreement on how digital firms should be tithed globally, putting an end to the squirreling-away of vast sums of money made by internet behemoths.

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