France vows to impose digital tax this year, Trump may retaliate with tariffs

On Thursday, French finance minister Bruno Le Maire vowed that France will tax big digital businesses this year whether there is progress or not towards an international deal on a levy, claiming that such a tax had never been more legitimate or more necessary.

France digital tax. Image: French flagLeigh Thomas for Reuters:

Nearly 140 countries from the Organisation for Economic Cooperation and Development (OECD) are negotiating the first major rewriting of tax rules in more than a generation, to take better account of the rise of big tech companies such as Amazon, Facebook, Apple and Google that often book profit in low-tax countries.

“Never has a digital tax been more legitimate and more necessary,” Finance Minister Bruno Le Maire told journalists on a conference call, adding such companies were doing better than most during the coronavirus crisis. “In any case, France will apply as it has always indicated a tax on digital giants in 2020 either in an international form if there is a deal or in a national form if there is no deal.”

France’s national tax has been a source of contention with Washington, which considers that it unfairly targets U.S. digital companies… Frustrated with the lack of global progress because of opposition from the United States where the tech giants are based, some countries like France introduced their own digital tax last year. Italy, Britain and Spain have also either already introduced their own digital taxes or plan to do so. Such moves triggered threats of retaliation via trade tariffs from Washington.

MacDailyNews Take: Last December, the U.S. vowed 100% tariffs on $2.4 billion in imports from France over such a digital tax that would harm U.S. tech firms including Apple.

As we wrote back in April 2019:

As per the EU itself, the smart approach for Apple et al. is to lobby for harmonized EU taxation over a state-by-state patchwork of taxes, as that will at least offer simplicity, stability, and predictability.


    1. Should kill the sales of Airbus aircraft to US carriers and help Boeing if any airline is buying these days. Lot in the pipeline, yet to be delivered.

  1. It occurs to me that most of what Apple sells in Europe is hardware, which all countries already tax heavily with a Value Added Tax of about 20% above the retail price paid in the U.S. What more could they want?

    1. The French Government only gets about half its revenue from VAT. As the name suggests, it is not a tax on the retail price of an item (that would be a sales tax) but on the added value. In the case of an imported item like Apple hardware, that is basically the difference between the wholesale and retail price. There may be (and probably is) VAT collected by other countries on the value added at various stages of manufacture and assembly, but France does not receive any of that. The French VAT revenue from Apple is much, much less than one might think.

      Most of the remainder of France’s government revenue comes from corporate and income taxes. Because of various tax shelter schemes, Apple and the other high-tech companies book as little income in France as they possibly can. Consequently, very little of the revenue that these companies earn in France from French citizens goes to support government services for those citizens in France.

      As MDN comments above, the best solution would be for the various countries concerned, including the US, the big EU and Asian countries, and the smaller tax shelter countries to agree how the income earned by multinational companies should be equitably allocated for tax purposes. The next-best solution would be a series of bilateral treaties between the US and the countries where American firms do business.

      The absolute worst solution is an economic war fought with hostile taxes and tariffs. In such a war, the big losers would be American firms like Apple that make the majority of their revenue outside the US.

    1. you might want to look up who actually takes it all. the richest people on the planet are corporate executives and wall street middlemen who never created a damn thing

      stop whining about the puppets and start paying attention to the puppet masters

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