France to hit Apple, other tech giants with new digital tax in January

Posted:
in General Discussion edited December 2018
France will introduce a new tax aimed at major technology companies, including Apple, Google, Amazon, and Facebook, with the digital tax attempting to extract funds from the tech giants while other efforts to reform European tax law are underway.

Apple logo on money


Arriving on January 1, the French government's "GAFA" tax," named after the four tech companies it is targeting, imposes the tax on digital revenues from large companies. The tax is being introduced to combat attempts by the firms to avoid paying what is considered a fair share" of taxes in the country, by taking advantage of European tax laws.

French finance minister Bruno Le Maire advised on Monday he expects the levy to bring in an estimated 500 million euro ($570 million) for 2019, reports The Local Fr. It is unclear exactly what the tax will cover, nor how much each company can be expected to pay, but it is highly likely Apple will be compelled to pay millions of euros to the government.

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.

Both Apple and the Irish government have appealed the ruling.

The European Commission has previously announced proposals to force digital media companies to pay taxes in the European Union based on where the revenue is generated, rather than the country of their European headquarters, as a way to close the loopholes. In theory, this would make the tech firms pay each country's specific tax rates, at a level relative to the income.

Despite seemingly high support, including from Germany, the plan has yet to become a reality. There may be a prolonged wait before any major reform passes through, as such measures would need to be agreed by all member states before becoming law.

The BBC reports the European Commission also mulled over the idea of charging a 3 percent tax on revenues of large Internet companies with global revenues in excess of 750 million euro ($850 million) per year, and an EU-taxable revenue of at least 50 million euro ($56 million).

In the meantime, some governments are looking into ways to apply taxes on digital goods.

In October, plans were announced by the United Kingdom to introduce similar "Digital Service Tax" of 2 percent on revenues from UK-based users, a tax that could be applied by April 2020. At its introduction, UK chancellor Philip Hammond stressed it would be a temporary measure until "an appropriate long-term solution is in place."
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Comments

  • Reply 1 of 78
    bshankbshank Posts: 160member
    Sounds like France needs some quick cash 
    jbdragoncanukstormwatto_cobra
  • Reply 2 of 78
    steven n.steven n. Posts: 1,108member
    Eventually, they will run out of other people's money.
    jbdragonracerhomie3entropysdavgregbshankwatto_cobra
  • Reply 3 of 78
    Let’s get something clear about taxes/ levies/ fees... there’s no such thing as a “fair share” because the application of taxes is inherently political and therefore the product of bias and influence.
    rob53jbdragonelijahgentropyswatto_cobraspheric
  • Reply 4 of 78
    jbdragonjbdragon Posts: 2,040member
    Corporations don't pay taxes, YOU DO!!! So you tax them more, they will just raise prices and YOU are the one that's actually paying. It's just a round about way in taxing YOU while making the politician look good. Oh look, he's getting those evil corporations who aren't paying taxes. Which is already a flat out lie. They want more money. In this case France and their failed policy's. Nothing like stealing more money from American company's as they sure can't seem to generate enough of their own.
    sdw2001bshankwatto_cobra
  • Reply 5 of 78
    really France, do u know that socialism does not work?  It’s seems like France’s economy is always in a recession.  I know that some of my ancestors are French, but the country seems like it’s always in a protest.  Aren’t they on their 15 constitution since the failed revolution.  Just saying that the tax is going to do what, pay for more beignets?
    SpamSandwichwatto_cobra
  • Reply 6 of 78
    Good for France and other "woke" nations. For those that are crying on Apple's behalf each nation has rules for those that live and earn income within that country. Apple and other tech giants have reaped massive amounts of money and by exploiting loopholes in the tax laws have managed to avoid paying what other business' are already paying.

    Yes Spam there is such a thing as "fair share" it is what the tax laws say is fair and not what a fan boy says it is for poor, little Apple. 

    edited December 2018 montrosemacselijahgfotoformatcropravon b7
  • Reply 7 of 78
    jkichlinejkichline Posts: 1,331member
    The goal of a corporation is to increase shareholder wealth. Tax is one of the last line items on the P+L and directly effects profitability. Therefore it is in the corporations best interest to lower its tax burden as much as possible given the applicable tax law. Apple and others are paying their fair share per the law. Don’t like it? Change the law and change the behavior of the corporation but don’t be surprised when those expenses are passed on to your constituents.
    canukstormradarthekatwatto_cobra
  • Reply 8 of 78
    Businesses should abandon France, along with Australia. The lunatic politicians in both countries are running amok.
    elijahgentropys
  • Reply 9 of 78
    Businesses should abandon France, along with Australia. The lunatic politicians in both countries are running amok.
    Because, of course, the only reason governments exist is to assure that corporations maximize profits. And speaking of lunatic politicians running amok, have you read a newspaper lately?
    spice-boyelijahgavon b7JWSCroundaboutnowwatto_cobra
  • Reply 10 of 78
    gatorguygatorguy Posts: 20,288member
    jbdragon said:
    Corporations don't pay taxes, YOU DO!!! So you tax them more, they will just raise prices and YOU are the one that's actually paying.
    If they raise prices then wouldn't that obligate them to even more taxes since they'll make even more profit?

    Besides that how do you raise prices after the sale occurred? Corporate taxes are paid on profits, which can only be determined after a sales period has closed.  How would you know how much to add in advance? I have zero doubt that Apple has already computed the optimal prices for their products, right to the final dollar to maximize its profits. Raising them more because France wants a bit of what they are paying as a corporation to end up in French accounts for French use rather than Irish ones would be counter to that. 

    If I'm off-base maybe you can explain.

    EDIT: It seems after doing a bit'o reading that the claim companies simply raise prices is more a FUD-ism than fact. I guess it gets repeated so much that some folks just accept that it must be true. 
    https://economix.blogs.nytimes.com/2013/02/19/who-pays-the-corporate-income-tax/
    edited December 2018 elijahgfotoformatavon b7roundaboutnow
  • Reply 11 of 78
    gatorguy said:
    jbdragon said:
    Corporations don't pay taxes, YOU DO!!! So you tax them more, they will just raise prices and YOU are the one that's actually paying.
    If they raise prices then wouldn't that obligate them to even more taxes?

    Besides that how do you raise prices after the sale occurred? Corporate taxes are paid on profits, which can only be determined after a sales period has closed.  How would you know how much to add in advance?

    If I'm off-base maybe you can explain.
    It's called "math".  You plug in the percentages and magnitude of the taxes, fees, tariffs, excise, "because we said so" payments, manufacturing costs, etc, decide how much profit you want, then voila the magic of math gives you the answer as to what price to charge.

    Taxes will always be passed on to the consumer, no matter what form they might take.
    radarthekatJFC_PA
  • Reply 12 of 78
    Businesses should abandon France, along with Australia. The lunatic politicians in both countries are running amok.
    LOL
  • Reply 13 of 78
    Europe is so insanely over-taxed as it is. Something's going to give when so many governments are getting so bloated.
  • Reply 14 of 78

    Businesses should abandon France, along with Australia. The lunatic politicians in both countries are running amok.
    Because, of course, the only reason governments exist is to assure that corporations maximize profits. And speaking of lunatic politicians running amok, have you read a newspaper lately?
    I agree and will add there is no talking logic with people who can never find fault with Apple. 
  • Reply 15 of 78
    SoliSoli Posts: 8,687member
    OMG! I can't believe Apple is raising their prices in France! /s
  • Reply 16 of 78
    gatorguygatorguy Posts: 20,288member
    gatorguy said:
    jbdragon said:
    Corporations don't pay taxes, YOU DO!!! So you tax them more, they will just raise prices and YOU are the one that's actually paying.
    If they raise prices then wouldn't that obligate them to even more taxes?

    Besides that how do you raise prices after the sale occurred? Corporate taxes are paid on profits, which can only be determined after a sales period has closed.  How would you know how much to add in advance?

    If I'm off-base maybe you can explain.
    It's called "math".  You plug in the percentages and magnitude of the taxes, fees, tariffs, excise, "because we said so" payments, manufacturing costs, etc, decide how much profit you want, then voila the magic of math gives you the answer as to what price to charge.

    Taxes will always be passed on to the consumer, no matter what form they might take.
    Apple's desired margins, almost assuredly maxed out to yield the greatest profits as most corporations try to do,  are pre-tax not post aren't they?  Raising them further would potentially harm sales and not help, leading to lower profits.  

    EDIT: Another link that explains why the oft-repeated claim is mostly false:
    https://www.huffingtonpost.com/dave-johnson/tax-tricks---do-corporati_b_541709.html
    edited December 2018
  • Reply 17 of 78
    JanNLJanNL Posts: 259member
    So in the EU it’s not allowed to lower unilaterally/for one company taxes (Ireland), but raising taxes unilaterally (France) ís  allowed?
    Soliboltsfan17entropysdavgregrandominternetpersonuraharaLordeHawkMacProwatto_cobra
  • Reply 18 of 78
    SoliSoli Posts: 8,687member
    JanNL said:
    So in the EU it’s not allowed to lower unilaterally/for one company taxes (Ireland), but raising taxes unilaterally (France) ís  allowed?
    That's an interesting point. 🤔 
    davgregwatto_cobra
  • Reply 19 of 78
    Corporate status itself, and all of the various protections/advantages it brings, comes from the government itself and is only possible with the government. Thus all the whining about taxes is ultimately moot. 
    gatorguymontrosemacs
  • Reply 20 of 78
    croprcropr Posts: 914member
    gatorguy said:
    jbdragon said:
    Corporations don't pay taxes, YOU DO!!! So you tax them more, they will just raise prices and YOU are the one that's actually paying.
    If they raise prices then wouldn't that obligate them to even more taxes?

    Besides that how do you raise prices after the sale occurred? Corporate taxes are paid on profits, which can only be determined after a sales period has closed.  How would you know how much to add in advance?

    If I'm off-base maybe you can explain.
    It's called "math".  You plug in the percentages and magnitude of the taxes, fees, tariffs, excise, "because we said so" payments, manufacturing costs, etc, decide how much profit you want, then voila the magic of math gives you the answer as to what price to charge.

    Taxes will always be passed on to the consumer, no matter what form they might take.
    Of course not.   Taxes on profits are not only calculated on the margin of a single product sold last year, but on a multitude of products and on financial results and on the outcome of mergers and acquisitions. 

    For large organizations like Apple, It is a given fact that the margin on different products are different, that the mix of sold products will also evolve in time, that nobody knows upfront which potential acquisitions will materialize at which value.  And all these factors have a huge impact on the profit a company is making and hence on the tax that has to be paid.  So there exists no mathematical model that precisely estimates the profit of a company when the price of product is being set.

    If you could predict that you would not given here some foolish comments, but you would make heaps of money as CFO of a very large company.

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