Google, Facebook, Amazon decry French digital tax as 'discriminatory'

Donald Trump

Donald Trump

Google, Facebook, and Amazon and several other major tech companies argued the digital services tax by France will hurt small business and consumers during a U.S.

During his visit to New York's Hamptons for a fundraiser August 9, the president reportedly told attendees he was thinking about hitting France where it may hurt most - by slapping a 100 percent tariff on French wine.

The so-called GAFA companies appeared at a USTR hearing on possible countermeasures and were unanimous in their complaints, calling the tax a 'troubling precedent'.

The tax, which Washington considers unfair, adds yet another bone of contention to the transatlantic trade disputes that now also include steel, aluminium, automobiles, aircraft and agriculture.

He added that "while we may have the necessary data to calculate the tax, it would require additional time and resources to capture this data and maintain it for these new tax and audit purposes".

He tweeted last month: 'France just put a digital tax on our great American technology companies. If anybody taxes them, it should be their home Country, the USA.

The French Senate approved a 3 percent levy in July that would apply to digital services revenue earned in France by companies with more than 25 million euros in French revenue and 750 million euros ($838 million) worldwide.

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"The fact that such companies pay less tax in France than a large bakery or a cheese producer in Quercy creates a real problem, " French Finance Minister Bruno Le Maire said regarding the introduction of the measure. Depending on their comments, trade boss Robert Lighthizer could recommend that Trump impose tariffs on France in response.

"It might be on wine, it might be on something else", Trump then told reporters about his plan. For instance, in order to level the losses from the new tax, Amazon recently announced that it would be raising seller fees by three percent for small and medium-sized French businesses that operate via the company's online stores starting in October.

Facebook global tax policy head Alan Lee's testimony said the tax "poses difficulties for Facebook's business model and will hinder growth and innovation in the digital economy" and claimed it would require a re-engineering of its systems.

"Amazon can not absorb the expenses", and the company "already informed partners that their fee will increase starting October 1", he added Some internet heavyweights have taken advantage of low-tax jurisdictions in places like Ireland while paying next to nothing in other countries where they derive huge profits. All global multinationals operating in France will have to pay the tax - including 30 companies from the United States, China, Germany, Spain and Britain.

But it does not apply to other internet operators like media companies.

Taxing only this part of the industry 'doesn't make sense'.

The tax, dubbed the GAFA (Google, Apple, Facebook and Amazon) in the U.S., is retroactive and applies from January 1, 2019.

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