French digital service tax target United States companies unfairly says administration

French digital service tax target United States companies unfairly says administration

French digital service tax target United States companies unfairly says administration

But French lawmakers on Thursday proceeded to establish a 3 percent tax on among others, Amazon and Facebook, on grounds that companies must be taxed where they operate.

France is hoping for either one of two outcomes- that countries will either implement their own, independent taxes; or that this move gives momentum to calls for a multilateral agreement of how digital firms should be taxed globally.

'I want to tell our American friends that this should be an incentive for them to accelerate even more our work to find an agreement on the global taxation of digital services, ' he said.

About 30 companies will pay the new tax, most of which are U.S. tech giants such as Alphabet, Apple, Facebook, Amazon and Microsoft.

The tax faced criticism from tech executives, who said it would damage French President Emmanuel Macron's attempt to transform the country into a "start-up nation". Ireland is among the countries that blocked a European Union wide tax, before France pressed ahead on its own.

Draft legislation introduced Thursday in the United Kingdom would impose a 2% tax on local revenue of large search companies, social media platforms and online marketplaces, starting in 2020.

Paris-based tax lawyer Jessie Denton told BBC that this tax is more of a "symbol" than an effective tax measure, as it raises a relatively small sum of money.

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Lighthizer's office said it had reason to believe that France was "unfairly targeting the tax" on United States companies. The levy will apply to companies with more than 500 million pounds ($626 million) in revenue, if more than 25 million pounds comes from British users.

Tech giants face payments in the tens of millions under the measure.

France argues these firms have long benefited from global tax loopholes that aggressively minimize their tax bill in countries where they aren't headquartered.

For comparison, Apple raked in more than $13 billion in sales in Europe in the first-quarter of the year, while Facebook's European revenues were $3.65 billion during that period.

He added that the alliance between the U.S. and France is not reasons for the United States to interfere with French tax policies, adding that threats will not work with France. Mr Boris Johnson, the man most likely to become the country's new prime minister by the end of this month, vows to hit the companies harder.

Furthermore, Paris has pledged to drop its tax as soon as an worldwide agreement is reached at the Organisation for Economic Cooperation and Development to overhaul decades-old cross-border tax rules for the digital era.

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