Briefing

France passes three per cent tax on tech giants, defying U.S. threats

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Digital companies with more than US$850 million in global revenue and that generate at least €25 million in France (about US$28 million) will be subject to the tax. Washington has ordered an investigation into whether the levy restricts U.S. commerce, a first step that could lead to imposing punitive tariffs. The tax would apply to about 30 firms including the FAANGs, as well as Chinese firms and at least one French company, Criteo. (BBC)

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Talking point: The U.S. also used an investigation as a first step before launching billions of dollars in tariffs against China. The move comes as a number of countries—including Spain, Austria and the U.K.—are considering similar taxes to the one France just passed (the U.K. published draft legislation for a two per cent tax on Thursday). The U.S. could end up in a multi-continent fight over this. New Zealand’s government has proposed a two to three per cent tax; India is looking at a similar one, and has already passed legislation favouring local e-commerce firms over Walmart and Amazon. After the stalling of several multilateral attempts to tax tech giants on the profits they make, a growing number of countries are now working independently. France’s move follows the collapse of an attempt to pass an EU-wide tax. Canada’s Department of Finance regularly cites an ongoing review by the OECD as the way it’s approaching the issue. Earlier this week, lawyers working on that agreement said a final deal is unlikely before 2020.