France will not apply digital tax on Apple & others while trade discussions continue
France's tax aimed at internet multinational companies like Apple, Amazon, Google, and Apple, has been postponed as U.S. President Donald Trump and French President Emmanuel Macron work together to avoid a rise in tariffs.
Trump and Macron in 2018 | Image Credit: Shealah Craighead
Trump and Macron have forged a temporary truce and will postpone a tariff war until the end of 2020. Paris has agreed to suspend down payments on this year's digital tax provided that Washington would negotiate a solution, rather than threatening imposing tariffs on France.
Originally proposed in December of 2018, the so-called GAFA - Google, Apple, Facebook, and Amazon - tax, had been given a stamp of approval by the French senate in July of 2019. The tax would have been applied retroactively.
Under the measure, the 3% sales tax would be applied to sales generated in France by major multinational firms. France has pulled back on demanding the retroactive down payments temporarily, in an effort to prevent the U.S. from applying tariffs to French-made goods.
"What we're proposing is to give ourselves time and to show our goodwill, to postpone the remaining payments to December," a French Finance Ministry source said, according to Reuters.
Finance Minister Bruno Le Maire and U.S. Treasury Secretary Steven Mnuchin are due to negotiate the details in Davos, Switzerland, on Wednesday, the source added.
France has attempted to use the tax to reacquire taxes from revenue that goes through various processes by firms to reduce their outlay, such as the "Double Irish" performed by Apple. The European Union is working to reform taxes across the continent to minimize such activities, but while individual countries can apply regional laws relatively quickly, a Europe-wide measure will take longer to implement.
Major tech companies have come under fire for shifting funds around the European union to minimize their tax outlay, and in some cases funneling revenue through operations in countries with extremely low tax rates or other arrangements.
The taxes have led to criticism from various organizations, and in the case of Apple in France, led to protests in Apple Stores over the use of loopholes.
A 2016 ruling by the European Commission declared Ireland had to collect billions in back taxes from Apple, after being found to have extended preferential tax treatment to the company.
Apple has since paid the entire 13.1 billion euro ($15.3 billion) balance, as well as 1.2 billion euro in interest, into an escrow account controlled by the Irish government.
Trump and Macron in 2018 | Image Credit: Shealah Craighead
Trump and Macron have forged a temporary truce and will postpone a tariff war until the end of 2020. Paris has agreed to suspend down payments on this year's digital tax provided that Washington would negotiate a solution, rather than threatening imposing tariffs on France.
Originally proposed in December of 2018, the so-called GAFA - Google, Apple, Facebook, and Amazon - tax, had been given a stamp of approval by the French senate in July of 2019. The tax would have been applied retroactively.
Under the measure, the 3% sales tax would be applied to sales generated in France by major multinational firms. France has pulled back on demanding the retroactive down payments temporarily, in an effort to prevent the U.S. from applying tariffs to French-made goods.
"What we're proposing is to give ourselves time and to show our goodwill, to postpone the remaining payments to December," a French Finance Ministry source said, according to Reuters.
Finance Minister Bruno Le Maire and U.S. Treasury Secretary Steven Mnuchin are due to negotiate the details in Davos, Switzerland, on Wednesday, the source added.
France has attempted to use the tax to reacquire taxes from revenue that goes through various processes by firms to reduce their outlay, such as the "Double Irish" performed by Apple. The European Union is working to reform taxes across the continent to minimize such activities, but while individual countries can apply regional laws relatively quickly, a Europe-wide measure will take longer to implement.
Major tech companies have come under fire for shifting funds around the European union to minimize their tax outlay, and in some cases funneling revenue through operations in countries with extremely low tax rates or other arrangements.
The taxes have led to criticism from various organizations, and in the case of Apple in France, led to protests in Apple Stores over the use of loopholes.
A 2016 ruling by the European Commission declared Ireland had to collect billions in back taxes from Apple, after being found to have extended preferential tax treatment to the company.
Apple has since paid the entire 13.1 billion euro ($15.3 billion) balance, as well as 1.2 billion euro in interest, into an escrow account controlled by the Irish government.
Comments
This is such a BS.
As an aside, it's really wonderful to see the US government finally using a stick (rather than failed carrots) to deal with such silliness around the world.
The concern is companies based outside France that are taking French money from the French economy but not supporting French workers, industry or Government.
They can't have it both ways.
https://en.wikipedia.org/wiki/German-occupied_Europe
At leas there were resistances, including in France.
Don't think that Trump's tariffs actually had much to do with anything. The EU would not sit by and let France get bullied. That's one of the trade advantages of being in the EU trading bloc.
All this is happening in a bigger picture of wider EU commerce with the U.S and China.
All the pieces are in the air right now and timing is key. That's where France stepped on a turd and now realises that the moment was wrong.
The EU would love to snatch some Boeing orders from China. Germany doesn't want to lose automobile sales in China which will probably depend on the Huawei situation.
In the short term, there is a feeling that Trump actually won't be around for much longer anyway and so a wait and see approach makes sense.
Longer term, the EU needs to weigh up its commercial interests and decide which bloc offers the best business. As both the EU and China have stated their own goals to become non-dependent on U.S technology (and both have accelerated their plans precisely because of Trump), the U.S runs the risk of a certain degree of isolation on many levels.
Trump has destroyed trust, threatened allies, used cowboy diplomacy and single handedly caused damage to U.S companies.
The only non-U.S person on the planet who might have something to gain from the Trump chaos is Putin.