The recent headline "France Approves Tax On Big Tech, And U.S. Threatens To Retaliate" generated mixed emotions until I drilled down to really understand what's going on. It was recently announced that France will levy a 3% tax on digital companies that make large profits in the country, specifically the U.S. tech behemoths known in France as "Les GAFA" — Google, Amazon, Facebook and Apple.
They're doing this because French officials have been frustrated that digital companies are able to avoid taxes by establishing their European headquarters in
countries such as Ireland and the Netherlands, which offer corporations
low tax rates, and France says it will roll back its tax if an EU levy takes
effect. The European Commission calculates that digital businesses pay an effective tax rate of 9.5%, compared with 23.2% paid by traditional companies.
So the point is that France isn't exactly
targeting the U.S., it's trying to establish norms in the EU. So if Arkansas and North Dakota want to give
GAFA bigger tax breaks on "Federal" laws, (not just their state) it would
be illegal in the U.S. States cannot exempt Federal, so what this means is that the EU is
still working out their "Union" and this is one of the areas.
Apparently the United States is very concerned that the digital services
tax unfairly targets American companies, according to U.S. Trade
Representative Robert
Lighthizer. How is the U.S. threatening to retaliate? Last Wednesday,
President Trump ordered a probe of the French tax. It's a sign that
another trade war (like the one between the U.S. and China) could be
stirring – except that it's with one of America's allies, and in this
case, it's U.S. companies that are seen as the tax dodges. There's a NetLingo word for that Mr. POTUS: boil the ocean.
I
think the EU has every right to do this and it's the OECD that is helping move the world to understanding the necessity
of International Tax Laws. The U.S. or China or whomever, is making profits off
of French citizens and should be taxed and vice versa... the question is,
at what rate?
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Erin Jansen,
Internet Specialist, Social Psychologist, Founder of NetLingo.com
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