France To Eliminate Digital Tax If International Deal Is Reached
French President Emmanuel Macron confirmed late Monday that France has reached an agreement with the United States regarding the digital services tax that his country approved in July. He said the big tech tax will be shelved on one condition that may or may not work.
According to CNBC, Macron announced that France will scrap its digital services tax of three percent on big tech firms if an international agreement on digital taxes is reached in the long run. Furthermore, companies affected by the digital tax will be paid back.
France has a list of big tech companies that will be required to pay the taxable percentage and some of these are American firms including Facebook, Google, and Amazon.
While France's digital tax is only applicable to companies that reach annual revenue of 750 million euros, other growing firms are concerned about the impact of the tax should they hit the said amount.
U.S. President Donald Trump launched a probe into the French digital tax shortly after it was overwhelmingly approved by the government. At that time, Washington said the tax was targeting American firms "unfairly."
For his part in the dispute, Trump threatened to impose tariffs on French wine, triggering fears among French companies that export wine to the U.S. With the resolution, it is expected that no tax duties will be imposed to the said products.
Earlier this month, tech industry leaders in the U.S. rallied to call for the abolition of the digital tax. According to Reuters, Amazon, Facebook, and Google testified before the U.S. Trade Representative's office to fight against France's new taxation regulation.
The U.S. Chamber of Commerce previously noted that the expected 500 million euros to be generated under the digital tax will be accounted for largely by "a large majority" of American tech giants.
However, other European Union (EU) member countries have already announced plans to have their own digital tax regulations. They said big tech firms are profiting even in low-tax countries because a levy does not exist.
Macron has kept a hard-line stance against U.S. big tech firms. While the supposed EU-wide implementation of digital taxes did not succeed, France pushed through on its own.
Meanwhile, Amazon reportedly passed down the responsibility of paying off the French digital tax to merchants on its platform. According to Forbes, the company's retaliation came in the form of higher seller fees for French merchants.
Amid queries from French Amazon sellers, the company maintained that passing on the digital tax was a normal thing. It is worth noting that a large chunk of Amazon merchants fall under the SME category, making it hard for smaller firms to cope with the changes.
