U.S. to investigate planned French tax on Apple, other tech giants [u]
President Donald Trump is planning to launch a probe into France's intent to implement a digital tax initiative targeting large internet companies, an investigation that could lead to tariffs or trade restrictions.
Citing sources familiar with the matter, Reuters reports the president will task U.S. Trade Representative Robert Lighthizer with completing an investigation of the so-called GAFA -- Google, Apple, Facebook and Amazon -- tax, which would apply a 3% levy on French revenue generated by tech firms.
The tax applies to companies with revenues over 750 million euros (about $845 million) per annum, a relatively high bar that would target about 30 firms, most of them American. As noted by the report, companies from China, Germany, Spain and the UK are also affected by the proposed tax. One French firm and a handful of companies with roots in France would also be subject to the 3% tax, the report said.
Trump's supposed probe, called a "Section 301" investigation, will seek to determine whether the tax amounts to an unfair trade practice under the U.S. Trade Act of 1974. The White House previously used Section 301 to level tariffs on China over alleged patent theft, a move that sparked a trade war impacting a wide range of U.S. industries.
France officially announced plans for the GAFA tax in December to hold multinational tech companies responsible for paying their "fair share" of taxes. Large firms sometimes take advantage of favorable European laws to shuttle international profits to low tax rate countries, thereby avoiding hefty levies.
French finance minister Bruno Le Maire last year said the tax plan is expected to bring in 500 million euros ($563 million) over 2019.
France's National Assembly greenlit GAFA last week. The measure is now headed to the country's Senate, which will vote on its passage on Thursday.
Update: The investigation was formally announced on Wednesday night.
"The United States is very concerned that the digital services tax which is expected to pass the French Senate tomorrow unfairly targets American companies," Lighthizer said in a statement.
Citing sources familiar with the matter, Reuters reports the president will task U.S. Trade Representative Robert Lighthizer with completing an investigation of the so-called GAFA -- Google, Apple, Facebook and Amazon -- tax, which would apply a 3% levy on French revenue generated by tech firms.
The tax applies to companies with revenues over 750 million euros (about $845 million) per annum, a relatively high bar that would target about 30 firms, most of them American. As noted by the report, companies from China, Germany, Spain and the UK are also affected by the proposed tax. One French firm and a handful of companies with roots in France would also be subject to the 3% tax, the report said.
Trump's supposed probe, called a "Section 301" investigation, will seek to determine whether the tax amounts to an unfair trade practice under the U.S. Trade Act of 1974. The White House previously used Section 301 to level tariffs on China over alleged patent theft, a move that sparked a trade war impacting a wide range of U.S. industries.
France officially announced plans for the GAFA tax in December to hold multinational tech companies responsible for paying their "fair share" of taxes. Large firms sometimes take advantage of favorable European laws to shuttle international profits to low tax rate countries, thereby avoiding hefty levies.
French finance minister Bruno Le Maire last year said the tax plan is expected to bring in 500 million euros ($563 million) over 2019.
France's National Assembly greenlit GAFA last week. The measure is now headed to the country's Senate, which will vote on its passage on Thursday.
Update: The investigation was formally announced on Wednesday night.
"The United States is very concerned that the digital services tax which is expected to pass the French Senate tomorrow unfairly targets American companies," Lighthizer said in a statement.
Comments
Two can play at this game!
Broke, desperate and corrupt Euroheads should look elsewhere for their extortion schemes, because we still got some cards left in our deck that we haven't yet played.
They'll come around pretty quickly.
As we've all said before, Apple pays the taxes it's required to pay. They can't help the fact that EU countries sometimes don't want to go along with the EU board. For those in the EU, which countries end up with all the extra money? I doubt it's split fairly.
Tax-dodging multinationals have an unfair advantage over small local companies who can’t base their operations in tax havens.
How come you're allowed to claim every financial benefit but corporations aren't? Why are you special and different?
Apple doesn't own itself. Its stockholders own it. Little people. You probably have Apple stock without knowing it. Through your bank and your pension and your investments. You are Apple.
I think that France as independent country have right to impose whatever taxes it chooses (in line with commitments given to EU, WTO, bilateral trade agreements etc).
Every European company which have meaningful sales revenue (in my country for example 40K euros per year) is subject to VAT (value added tax). Tax rate differ by countries and it can be as low as 7.7% ins Switzerland (not member of EU) and as high as 27% in Hungary, average is around 20%. Every company which is subject to VAT tax must pay this tax based on sales revenue. As always there are lot of details - you can deduct VAT you have paid to others and essentially (not counting labour cost) you have to pay this rate only on 'value added' (a.k.a margin/markup) part. You pay VAT on sales both to consumers and companies. Export is generally VAT free.
I don't see this tax hike (from 20% to 23% in France) something very significant nor aimed against US companies.
I think that this will be illegal by WTO rules (and probably some US laws as well). If US wants to implement taxes in same fashion as France then tax should be implemented in non-discriminatory way: to every item in product group (not handpicking companies, brands, countries of origin etc). Tax can be levied based on price (for example every plane, sparkling wine or perfume which cost more than certain amount).
It would be surprising if US declares Danone yogurt as matter of national security, but you never know :-).
It's not a proposal targeting U.S companies. It targets all companies in the sector who go over a certain threshold.
If data is the key to the future and can be weaponised, France could feasibly declare the potentially affected U.S companies 'national security threats' and ban them altogether. Solely on the risk they pose.
I think Trump could relate to that.