France levies 3 percent tax on major tech firms

France levies 3 percent tax on major tech firms

France levies 3 percent tax on major tech firms

It will target companies such as Google and Facebook with a 3% levy on revenue made inside France.

The law may also cover some Indian, British and Chinese firms.

"The United States will continue its efforts with other countries at the OECD to reach a multilateral agreement to address the challenges to the worldwide tax system posed by an increasingly digitized global economy", the USTR said in its statement Wednesday. "I profoundly believe that between allies we can and should resolve our differences through means other than threats", he said.

British Green MEP Molly Scott Cato said the latest USA threat from Trump also served as a timely reminder for the United Kingdom, which is planning a similar tax on tech giants.

French President Emmanuel Macron's government had pushed ahead on its own to impose the digital tax to "build the taxation of the 21st century", although questions have already arisen on whether it will really work.

During those protests, Amazon warehouse in the French town of Montélimar was targeted in last November. However, French officials stressed the law will affect around 30 companies, including some from China, Germany, Spain and the United Kingdom, not just the US. "Once again, I think that threats, sanctions, are not the good way of sorting out difficulties that we might have between the USA and France".

The "Section 301" investigation will determine if the levy poses an unfair trade practice. Other EU nations have announced their own plans for digital taxes, including Britain, Spain and Italy.

Despite the objections to the French tax proposal, however, the statement said the USA will continue to work with other advanced economies to address the conundrum of how to tax tech companies.

Trade groups that represent tech giants, such as the Computer and Communications Industry Association and the Internet Association, also have attacked the French legislation as discriminatory.

"The structure of the proposed new tax as well as statements by officials suggest that France is unfairly targeting the tax at certain US-based technology companies". Parcels are processed and prepared for dispatch at Amazon's fulfillment center in Peterborough, England, Nov. 15, 2016.

Following the failure in Brussels to agree on an EU-wide tax on the world's top digital companies by the end of 2018, the French government made a decision to impose the tax at national level. They say a tax is needed for multinational internet companies who are able to profit in low-tax countries despite having no physical presence.

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

For example, in 2017, Amazon UK's 2017 tax bill was $2.14m, less than 0.1 percent of its $2.5 billion turn-over. Moreover, the digital retail Goliath said that the French tax would cause "significant harm to American and French consumers alike".

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