France launches digital tax aimed at Apple and big tech companies

Posted:
in General Discussion edited November 2020
French authorities have reportedly begun demanding tax payments amounting to many millions of dollars from US technology firms, as part of its digital tax plans.

Apple logo on dollars


As Europe continues to plan an EU-wide digital tax for large technology corporations, despite the US leaving the negotiations, France has launched its own independent demands.

According to the Financial Times, French authorities have issued demands to companies, including Amazon and Facebook, for payment of taxes it says are due for 2020. It is not known if Apple has received such a demand, but the tax has previously been called "GAFA," after its biggest targets of Apple, Google, Amazon, and Facebook.

"We can't wait any longer and the tech companies are the big winners of the pandemic,"a French official told the publication. "[Big Tech companies'] turnover is soaring and they haven't been paying fair taxes even before the pandemic."

France originally announced this new tax in December 2018, but agreed to postpone its introduction. Both France and the US, the home of all four "GAFA" companies, originally agreed to allow time for Europe's OECD to devise an international plan.

"Everybody has been leaning pretty hard on the OECD process and saying we need agreement," Cathy Schultz, vice-president for tax policy at the National Foreign Trade Council in Washington, told the Financial Times. "But if we don't reach an agreement, these things are just going to run rampant and we're going to have more of the trade war."

Cook meets the developers of War Ducks in his latest trip to Ireland
Tim Cook urged worldwide tax reform during a trip to Ireland in 2020 (via Twitter/@tim_cook)


The US pulled out of the OECD negotiations. Separately, the US Trade Representative (USTR) has been investigating the French tax proposal. USTR's Robert Lighthizer has previously said that the tax "unfairly targets American companies."

In response to France introducing its tax demands, the Financial Times reports that the US is expected to introduce retailatory tariffs on some French goods. The US has previously considered 100% tariffs on champagne and cheese, and is now believed to be considering 25% tariffs on French handbags and makeup.

The Financial Times report does not include any specific figures concerning France's tax demands, but the French authorities have previously detailed their requirements. When first announced in December, France said the tax would amount to 3% of sales by multinational firms within its region.

Firms that qualify for this new digital tax have an annual revenue worldwide of over 750 million euros (approximately $890 million), and a generating at least 25 million euros ($30 million) in France itself.

In the 2018 announcement, French finance minister Bruno Le Maire said that he expected this tax to total around 500 million euros (then $570 million) for 2019.

Apple has not commented on the new tax demands. However, while Apple has previously disputed tax issues with the EU regarding its operations in Ireland, Tim Cook has been a strong advocate of worldwide tax reforms.
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Comments

  • Reply 1 of 26
    The power to tax is the power to destroy.

    Waiting for the sunshine and fresh air taxes.
    razorpitlkruppchristophbanantksundaramwatto_cobra
  • Reply 2 of 26
    crowleycrowley Posts: 8,717member
    Well done France.  Everyone is dragging their feet, good to see a country willing to do something.
    ronnGeorgeBMaclkruppOfer
  • Reply 3 of 26
    Isn't it easy to set up a subsidiary (or maybe other form)? Thus the subsidiary will be not a 'multinational' corporation. And thus the subsidiary operating in France won't pay that taxes.
    Please tell me. I don't know much about the corporate structure and taxes.
    watto_cobra
  • Reply 4 of 26
    This is what losing looks like 

    Apple needs to pass -through these taxes to French consumers 
    edited November 2020 lkruppSpamSandwichpujones1entropyschristophbanantksundaramuraharawatto_cobra
  • Reply 5 of 26
    davgreg said:
    The power to tax is the power to destroy.

    Waiting for the sunshine and fresh air taxes.
    Any taxes paid by Apple in France is deducted from taxes paid by Apple to the US. When the EU finally gets their act together, similar debits and credits for taxes will apply.

    It's a wash for companies like Apple. 

    And paying taxes is a benefit. "No taxation without representation". Now, Apple will get some influence how their tax money is spent, rather than continuing to argue they don't have to pay taxes. Taxes certainly don't disadvantage Apple compared to others who are also taxed. There's plenty going on in France -- at least there is policy or perception. France wants to create its own version of MIT/CalTech. 

    France and Europe has declined in these pursuits with the exception of CERN. Some 60 years ago now, for those of us wanted to pursue mathematics or computing sciences, we were strongly encouraged to learn Russian, German and/or French to read the great works in these fields. It's still a requirement today, but adding Chinese, Korean, Japanese. 

    I cut my teeth studying Edsgar Dykstra, Niklaus Wirth, John von Neumann, and the other greats. 
  • Reply 6 of 26
    GeorgeBMacGeorgeBMac Posts: 10,260member
    davgreg said:
    The power to tax is the power to destroy.

    Waiting for the sunshine and fresh air taxes.

    The power to tax is no different from the power of, say, an electric utility to charge its customers for services rendered.

    The fact is:   corporations provide products and services and so does government.  Each needs revenue if it is to continue offering products and services.
    People like free stuff.  But there is no free lunch.   Only freeloaders.
    avon b7muthuk_vanalingamOfer
  • Reply 7 of 26
    retailatory?


  • Reply 8 of 26
    red oak said:
    This is what losing looks like 

    Apple needs to pass -through these taxes to French consumers 

    My guess is that Apple can offset the amount paid for France against their US tax liability.
    Someone has to pay the taxes on profits somewhere. Many companies (mostly those domiciled in the USA) use complicated licensing arrangements to limit the tax they pay on profits in Europe. Somehow, they end up paying almost the same in licensing (tax deductable) as they made in profit.
    Countries like France are fed up with companies using this technique to avoid paying tax on the profits made in their county.

    Note that I'm careful to distinguish between 'taxes on profit' from other taxes such as VAT, property and payroll. Those can't be avoided.
    Mind you Amazon goes out of its way to lessen their property taxes. Many small shopkeepers pay more Business Rates for their shop than Amazon does for a mega warehouse. That is crazy.
    ronnOfer
  • Reply 9 of 26
    tjwolftjwolf Posts: 396member
    Pretty lazy reporting - not only does this article not explain what is actually being taxed, but neither does the linked article form 2018.  How is one to form an opinion on the fairness (the article mentions that the US thinks this tax unfairly targets US companies) when nothing is detailed?
  • Reply 10 of 26
    EU leeches.
    razorpitanantksundaram
  • Reply 11 of 26
    GeorgeBMacGeorgeBMac Posts: 10,260member
    aderutter said:
    retailatory?



    No, they've been discussing this for years --- international companies come into their country, operate as internal companies but pay no tax to fund the government and societal programs and infrastructure they rely on to do business.

    They're just being asked to pay their own way instead of freeloading.
    ronnOfermuthuk_vanalingam
  • Reply 12 of 26
    entropysentropys Posts: 3,105member
    Question: if Ireland can be taken to task by Brussels for not taxing enough, can France be forced to face its EU masters for taxing too much co pared with other subject states?
    edited November 2020
  • Reply 13 of 26
    Too bad, for French champagne, cheese, and lipstick. Oh, and Airbus. 


    SpamSandwich
  • Reply 14 of 26
    crowleycrowley Posts: 8,717member
    entropys said:
    Question: if Ireland can be taken to task by Brussels for not taxing enough, can France be forced to face its EU masters for taxing too much co pared with other subject states?
    No, EU states can set their tax rates however they see fit. You’ve misunderstood what the problem with Ireland was.
    ronnmuthuk_vanalingam
  • Reply 15 of 26
    People like free stuff.  But there is no free lunch.   Only freeloaders.
    I don't understand what it is Apple has done to be called a freeloader. They do not make the tax laws in France. They pay every penny of tax they are ordered by law to pay. I have no problem with France saying they need more money in taxes. But I do have a problem with demonizing companies for not paying their fair share. Again, they do pay their fair share according to current laws. Do you think Apple should look at their current tax bill and volunteer to pay more because it is just not enough? What could they have done to not be a freeloader in your eyes? 
  • Reply 16 of 26
    GAFA, huh? Well, I suppose it’s better than FAAG. 
    watto_cobra
  • Reply 17 of 26
    avon b7avon b7 Posts: 5,901member
    mac voyer said:
    People like free stuff.  But there is no free lunch.   Only freeloaders.
    I don't understand what it is Apple has done to be called a freeloader. They do not make the tax laws in France. They pay every penny of tax they are ordered by law to pay. I have no problem with France saying they need more money in taxes. But I do have a problem with demonizing companies for not paying their fair share. Again, they do pay their fair share according to current laws. Do you think Apple should look at their current tax bill and volunteer to pay more because it is just not enough? What could they have done to not be a freeloader in your eyes? 
    It isn't just Apple. It is anyone in a similar position. Apple and the rest of those companies of sufficient size to move money around the world and reduce their tax burdens would obviously come under the microscope at some point. 

    In the the EU/Ireland case, one of the claims arising from the investigation was that Apple itself was basically deciding what amounts to make subject to taxation. From there it's easy to say we pay all taxes due.

    New times (digital age) requiere new legislation. That legislation is often reactionary and that is the case here. 
    gatorguyGeorgeBMacmuthuk_vanalingam
  • Reply 18 of 26
    MacProMacPro Posts: 19,379member
    "The tax has previously been called "GAFA," after its biggest targets of ...  Apple, Google, Amazon, and Facebook."  What's wrong with this sentence?  lol
    watto_cobra
  • Reply 19 of 26
    GeorgeBMacGeorgeBMac Posts: 10,260member
    mac voyer said:
    People like free stuff.  But there is no free lunch.   Only freeloaders.
    I don't understand what it is Apple has done to be called a freeloader. They do not make the tax laws in France. They pay every penny of tax they are ordered by law to pay. I have no problem with France saying they need more money in taxes. But I do have a problem with demonizing companies for not paying their fair share. Again, they do pay their fair share according to current laws. Do you think Apple should look at their current tax bill and volunteer to pay more because it is just not enough? What could they have done to not be a freeloader in your eyes? 

    The problem is that international companies have been doing business in other countries but not paying taxes to them.  Instead they create fake headquarters in tax havens and only pay minimal taxes to those places -- not where they are actually making their profits.  To say they are paying what is legally required of them is technically true -- but ignores how they've been gaming the system.

    European countries have tired of being taken advantage of by international companies (mostly other than Apple).
    ronnmuthuk_vanalingam
  • Reply 20 of 26
    mac voyermac voyer Posts: 1,291member
    mac voyer said:
    People like free stuff.  But there is no free lunch.   Only freeloaders.
    I don't understand what it is Apple has done to be called a freeloader. They do not make the tax laws in France. They pay every penny of tax they are ordered by law to pay. I have no problem with France saying they need more money in taxes. But I do have a problem with demonizing companies for not paying their fair share. Again, they do pay their fair share according to current laws. Do you think Apple should look at their current tax bill and volunteer to pay more because it is just not enough? What could they have done to not be a freeloader in your eyes? 

    The problem is that international companies have been doing business in other countries but not paying taxes to them.  Instead they create fake headquarters in tax havens and only pay minimal taxes to those places -- not where they are actually making their profits.  To say they are paying what is legally required of them is technically true -- but ignores how they've been gaming the system.

    European countries have tired of being taken advantage of by international companies (mostly other than Apple).
    Those loopholes were not put there by Apple or any other company. They were put there by the governments to give tax breaks to their cronies. Apple is playing the game board and pieces they inherited. Change the tax code. Don't vilify companies for using it to their advantage. 
    uraharawatto_cobra
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