International

France’s ‘Digital Tax’ On Tech Firms Passes

Tax

Even with the United States announcing it would look into a proposed “digital tax” in France, the country is moving forward with the measure. The country’s Senate has approved the tax despite the threat of an investigation from the United States, according to 9 to 5 Mac.

The tax reportedly impacts any digital firm — Apple included — that has revenues exceeding $750 million with a minimum of $28 million generated in the country. It is said to target approximately 30 different firms such as Alphabet, Facebook, Apple, Amazon and Microsoft.

Tech firms would have to pay a 3 percent tax on sales in the nation — and the outlet reports that is on sales, not profits. At the same time, it was noted that the tax would be applied retroactively from the start of the year. While an investigation by the United States seeks to determine if the measure unfairly targets U.S. firms, France claims the tax’s aim is to make sure these firms are paying their favor share in nations where they lack a big physical presence.

Even though France has passed its own tax, the country is also reportedly pushing for a similar measure throughout the European Union. In the event that a like tax comes to fruition internationally, the country claims it will stop its tax in favor of the implementation across borders.

U.S. Trade Representative Robert Lighthizer is said to have 12 months to look into the tax. According to 9 to 5 Mac, “reports suggest that it could result in the United States imposing new tariffs or other trade restrictions on France.”

Earlier this year, it was reported that Chip Harter, the U.S. Treasury’s top international tax official, called the taxes “ill-conceived.” He said that the better option was to go after tax reform internationally at the Organisation for Economic Co-operation and Development (OECD).

Harter said, according to previous reports, “The challenges facing the international tax system are just far broader than how to tax social media and search engines.”

 

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