France approves digital tax measures against Apple despite US pressure

Posted:
in General Discussion
The French government has approved proposals for a tax on digital services, one that affects Apple and other major tech companies, despite concern the measure is unfairly targeting US-based companies in a bid to claw back tax revenue.

Apple logo on dollars


Originally proposed in December, the so-called GAFA - Google, Apple, Facebook, and Amazon - tax, was given a stamp of approval by the French senate on Thursday, just a week after passing through the National Assembly.

Under the measure, the 3% sales tax will be applied to sales generated in France by major multinational firms, reports the BBC, specifically those with revenue of more than 750 million euros ($846 million), and generating at least 25 million euros ($28 million) from with France itself. Furthermore, the tax will be retroactively applied to early 2019, and is anticipated to raise in the region of 400 million euros ($451 million) for this year alone.

France is using the tax as an attempt 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.

The tax is believed to be affecting roughly 30 firms, the majority of which are based in the United States. The skew of the affected companies has already led to a probe by US President Donald Trump into the matter, specifically if it is an unfair trade practice under the US Trade Act of 1974, with the "Section 301" investigation previously used to apply tariffs on China.

US Trade Representative Robert Lighthizer advised ahead of the tax's implementation the investigation will determine if it "is discriminatory or unreasonable and burdens or restricts United States commerce."

The US investigation has already received support by one of the companies that will be affected by the tax measure. Welcoming the investigation, a statement from Amazon received by CNBC calls the tax "poorly constructed" and "discriminatory," and that it would cause "significant harm to American and French consumers alike."
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Comments

  • Reply 1 of 186
    I am surprised that it took EU countries this long to enact these kinds of taxes. It’s common knowledge that Apple (with help from Ireland) took advantage of loopholes in international tax laws to reduce their tax burden. Of course, Apple has done nothing illegal, but it’s completely within each country’s rights to change tax laws to close those loopholes.
    charlesgresiCaveMacQcGilliam_Batesp-dogirelandGeorgeBMacjbdragonCarnagejony0
  • Reply 2 of 186
    roakeroake Posts: 663member
    pjs_socal said:
    I am surprised that it took EU countries this long to enact these kinds of taxes. It’s common knowledge that Apple (with help from Ireland) took advantage of loopholes in international tax laws to reduce their tax burden. Of course, Apple has done nothing illegal, but it’s completely within each country’s rights to change tax laws to close those loopholes.
    So imagine if every UN country charged Apple an additional 3% on gross revenue.
    edited July 13 cat52anantksundaramflyingdp
  • Reply 3 of 186
    roake said:
    pjs_socal said:
    I am surprised that it took EU countries this long to enact these kinds of taxes. It’s common knowledge that Apple (with help from Ireland) took advantage of loopholes in international tax laws to reduce their tax burden. Of course, Apple has done nothing illegal, but it’s completely within each country’s rights to change tax laws to close those loopholes.
    So imagine if every UN country charged Apple an additional 3% on revenue.
    It's not clear to me if the 3% tax would be on all of Apple's revenue or just its services revenue.  Is it clear to others?

  • Reply 4 of 186
    georgie01georgie01 Posts: 265member
    pjs_socal said:
    I am surprised that it took EU countries this long to enact these kinds of taxes. It’s common knowledge that Apple (with help from Ireland) took advantage of loopholes in international tax laws to reduce their tax burden. Of course, Apple has done nothing illegal, but it’s completely within each country’s rights to change tax laws to close those loopholes.
    On one hand you may be correct, but on the other hand (one you were not speaking about...) taxes just in general are outrageously high and collecting these is just another failed attempt at governing. These taxes are a burden put on citizens not out of fair altruism by recouping money lost through ‘loopholes’ in tax laws, but rather out of a general attitude of turning toward increased taxes in an attempt to make up for inefficiency and greed.

    We’ve gotten so used to this that we’re barely phased by it (outside of temporary moaning and complaining) even though everyone knows this is just a money grab.

    I firmly believe the government can be run generously with a 10% income tax collection (and no sales tax). We just need to change our attitudes about tax and the responsibilities of the government.
    cat52anantksundaramflyingdpentropysradarthekatLordeHawk
  • Reply 5 of 186
    avon b7avon b7 Posts: 4,211member
    roake said:
    pjs_socal said:
    I am surprised that it took EU countries this long to enact these kinds of taxes. It’s common knowledge that Apple (with help from Ireland) took advantage of loopholes in international tax laws to reduce their tax burden. Of course, Apple has done nothing illegal, but it’s completely within each country’s rights to change tax laws to close those loopholes.
    So imagine if every UN country charged Apple an additional 3% on gross revenue.
    Where would the problem be? It's a decision each sovereign state must weigh up. And in this case it isn't 'Apple', it's companies that go above a specific limit.
    iCavep-dogGeorgeBMac
  • Reply 6 of 186
    roake said:
    pjs_socal said:
    I am surprised that it took EU countries this long to enact these kinds of taxes. It’s common knowledge that Apple (with help from Ireland) took advantage of loopholes in international tax laws to reduce their tax burden. Of course, Apple has done nothing illegal, but it’s completely within each country’s rights to change tax laws to close those loopholes.
    So imagine if every UN country charged Apple an additional 3% on revenue.
    It's not clear to me if the 3% tax would be on all of Apple's revenue or just its services revenue.  Is it clear to others?

    Digital revenue generated in France. 
    p-dogGeorgeBMacmuthuk_vanalingam
  • Reply 7 of 186
    crowleycrowley Posts: 6,019member
    roake said:
    pjs_socal said:
    I am surprised that it took EU countries this long to enact these kinds of taxes. It’s common knowledge that Apple (with help from Ireland) took advantage of loopholes in international tax laws to reduce their tax burden. Of course, Apple has done nothing illegal, but it’s completely within each country’s rights to change tax laws to close those loopholes.
    So imagine if every UN country charged Apple an additional 3% on gross revenue.
    As long as Apple's competitors are getting the same treatment, what's wrong with that?  

    Apple avoid a whole lot more than 3% with their financial arrangements.
    edited July 13 iCaveMacQcp-dogGeorgeBMacmuthuk_vanalingam
  • Reply 8 of 186
    dougddougd Posts: 281member
    Awww Apple has to pay some tax boo hoo
    ireland
  • Reply 9 of 186
    iCaveiCave Posts: 5member
    roake said:
    pjs_socal said:
    I am surprised that it took EU countries this long to enact these kinds of taxes. It’s common knowledge that Apple (with help from Ireland) took advantage of loopholes in international tax laws to reduce their tax burden. Of course, Apple has done nothing illegal, but it’s completely within each country’s rights to change tax laws to close those loopholes.
    So imagine if every UN country charged Apple an additional 3% on gross revenue.
    3% tax is on gross revenue generated in that country (from digital services in this case), which seems perfectly reasonable.

    This is a good interim measure at least until the whole of EU passes a common tax law. At some point, corporations need to realize that pitting one country against another to get favourable tax treatment (looking at you Ireland and Luxembourg) can only take you so far.

    I love Apple (the company) to pieces but when it comes to taxation, it appears to use tax loopholes like any other corporation does.
    p-dogGeorgeBMacmuthuk_vanalingamCarnage
  • Reply 10 of 186
    iCaveiCave Posts: 5member
    georgie01 said:
    pjs_socal said:
    I am surprised that it took EU countries this long to enact these kinds of taxes. It’s common knowledge that Apple (with help from Ireland) took advantage of loopholes in international tax laws to reduce their tax burden. Of course, Apple has done nothing illegal, but it’s completely within each country’s rights to change tax laws to close those loopholes.
    On one hand you may be correct, but on the other hand (one you were not speaking about...) taxes just in general are outrageously high and collecting these is just another failed attempt at governing. These taxes are a burden put on citizens not out of fair altruism by recouping money lost through ‘loopholes’ in tax laws, but rather out of a general attitude of turning toward increased taxes in an attempt to make up for inefficiency and greed.

    We’ve gotten so used to this that we’re barely phased by it (outside of temporary moaning and complaining) even though everyone knows this is just a money grab.

    I firmly believe the government can be run generously with a 10% income tax collection (and no sales tax). We just need to change our attitudes about tax and the responsibilities of the government.
    I'm not sure which country you are from, but looking at high quality health care and affordable education provided in most of the European Union, it bears evidence that high taxes, when used the right way, do pay social dividends.

    Coming to this particular topic, it appears that even if the corporation tax is 5% and there is a legal loophole to pay 4% instead, companies still tend to try to save that 1%. Looking that way, this is a sane solution.

    There are no 'too high' or 'too low' taxes.  A society needs some revenue to cover its social expenses and this society has to look after itself, just as corporations look at their own profit motive. Taxation is a good way to implement this.
    p-dogfotoformatxyzzy01GeorgeBMacjony0
  • Reply 11 of 186
    macxpressmacxpress Posts: 4,979member
    So does this mean prices in France for services will raise 3%? If so, how does this help the customer? 
  • Reply 12 of 186
    cat52cat52 Posts: 38member
    A 3% tax on gross revenue, rather than profit, is an exceptionally poor idea, even for the French. Will the US respond with a 3% revenue tax on champagne?
  • Reply 13 of 186
    rob53rob53 Posts: 2,086member
    macxpress said:
    So does this mean prices in France for services will raise 3%? If so, how does this help the customer? 
    It doesn't, at least not initially or directly. I can almost guarantee all companies subject to this tax will raise prices to cover the tax. I would like to know what France is planning on doing with this income. Will they, as @iCave suggested, use it to help cover health care and education expenses. If they do, consumers should welcome it. If they simply use it to pay for worthless things that don't help the French society, then it's a typical money grab. Time will tell. 
    muthuk_vanalingam
  • Reply 14 of 186
    anantksundaramanantksundaram Posts: 19,387member
    avon b7 said:
    roake said:
    pjs_socal said:
    I am surprised that it took EU countries this long to enact these kinds of taxes. It’s common knowledge that Apple (with help from Ireland) took advantage of loopholes in international tax laws to reduce their tax burden. Of course, Apple has done nothing illegal, but it’s completely within each country’s rights to change tax laws to close those loopholes.
    So imagine if every UN country charged Apple an additional 3% on gross revenue.
    Where would the problem be? It's a decision each sovereign state must weigh up. And in this case it isn't 'Apple', it's companies that go above a specific limit.
    Taxing revenues is unheard of. And stupid. Only pre-tax profits are typically taxed. 

    If a company like Walmart or GM were taxed at 3% of revenues, they’d have no profits left. This ill-advised EU move opens up a completely new front in a likely serious trade war. 

    I predict they’ll have to back off. 
    cat52bb-15LordeHawk
  • Reply 15 of 186
    tjwolftjwolf Posts: 299member
    I agree that nations have the right to tax however they please, as long as it’s not discriminatory.  I completely disagree that France should be able tax retroactively.  That’s like selling something and then, after the sale, tell the person who bought that they need to pay some more.

    With respect to the title of the article, I find it interesting that Apple is singled out (as usual), when its services revenue is probably the least among the named mentioned companies (AMZN, FB, GOOG).
    radarthekatGeorgeBMac
  • Reply 16 of 186
    anantksundaramanantksundaram Posts: 19,387member
    crowley said:
    roake said:
    pjs_socal said:
    I am surprised that it took EU countries this long to enact these kinds of taxes. It’s common knowledge that Apple (with help from Ireland) took advantage of loopholes in international tax laws to reduce their tax burden. Of course, Apple has done nothing illegal, but it’s completely within each country’s rights to change tax laws to close those loopholes.
    So imagine if every UN country charged Apple an additional 3% on gross revenue.
    As long as Apple's competitors are getting the same treatment, what's wrong with that?  

    Apple avoid a whole lot more than 3% with their financial arrangements.
    The “financial arrangements” you speak of are completely legal. Governments in the EU should have the b4lls to change their laws to make them illegal.

    What they’re doing with these revenue taxes — and if egged on by tax-paying citizens of their countries — is utterly hypocritical. Why don’t you tell us: If you do pay taxes, do you pay a dollar (or euro) more than is required under the law? If you do not pay more, with all due respect, you should not render an opinion on this topic. 
    cat52LordeHawk
  • Reply 17 of 186
    anantksundaramanantksundaram Posts: 19,387member
    dougd said:
    Awww Apple has to pay some tax boo hoo
    “Some”? 3% of revenues for a company with a 20% pre-tax profit margin is a 15% tax rate. For a company with 3% margin, it’s a 100% tax rate

    You like spending other people’s money, eh?
    cat52bb-15
  • Reply 18 of 186
    anantksundaramanantksundaram Posts: 19,387member
    iCave said:
    georgie01 said:
    pjs_socal said:
    I am surprised that it took EU countries this long to enact these kinds of taxes. It’s common knowledge that Apple (with help from Ireland) took advantage of loopholes in international tax laws to reduce their tax burden. Of course, Apple has done nothing illegal, but it’s completely within each country’s rights to change tax laws to close those loopholes.
    On one hand you may be correct, but on the other hand (one you were not speaking about...) taxes just in general are outrageously high and collecting these is just another failed attempt at governing. These taxes are a burden put on citizens not out of fair altruism by recouping money lost through ‘loopholes’ in tax laws, but rather out of a general attitude of turning toward increased taxes in an attempt to make up for inefficiency and greed.

    We’ve gotten so used to this that we’re barely phased by it (outside of temporary moaning and complaining) even though everyone knows this is just a money grab.

    I firmly believe the government can be run generously with a 10% income tax collection (and no sales tax). We just need to change our attitudes about tax and the responsibilities of the government.
    I'm not sure which country you are from, but looking at high quality health care and affordable education provided in most of the European Union, it bears evidence that high taxes, when used the right way, do pay social dividends.

    Coming to this particular topic, it appears that even if the corporation tax is 5% and there is a legal loophole to pay 4% instead, companies still tend to try to save that 1%. Looking that way, this is a sane solution.

    There are no 'too high' or 'too low' taxes.  A society needs some revenue to cover its social expenses and this society has to look after itself, just as corporations look at their own profit motive. Taxation is a good way to implement this.
    Corporate taxes are ultimately paid by the citizens in the taxed country. Just as with tariffs on imports. Just because it’s an indirect tax doesn’t mean you’re not paying it. It is simply a different means of collecting taxes from citizens.

    Only an uniformed person would think otherwise. 
    cat52flyingdpbb-15LordeHawk
  • Reply 19 of 186
    roake said:
    pjs_socal said:
    I am surprised that it took EU countries this long to enact these kinds of taxes. It’s common knowledge that Apple (with help from Ireland) took advantage of loopholes in international tax laws to reduce their tax burden. Of course, Apple has done nothing illegal, but it’s completely within each country’s rights to change tax laws to close those loopholes.
    So imagine if every UN country charged Apple an additional 3% on gross revenue.
    No problem with that at all. Remember it’s only 3% on sales in each country respectively. So the total can never exceed 3% of each company’s sales outside the US.
    muthuk_vanalingam
  • Reply 20 of 186
    crowleycrowley Posts: 6,019member
    avon b7 said:
    roake said:
    pjs_socal said:
    I am surprised that it took EU countries this long to enact these kinds of taxes. It’s common knowledge that Apple (with help from Ireland) took advantage of loopholes in international tax laws to reduce their tax burden. Of course, Apple has done nothing illegal, but it’s completely within each country’s rights to change tax laws to close those loopholes.
    So imagine if every UN country charged Apple an additional 3% on gross revenue.
    Where would the problem be? It's a decision each sovereign state must weigh up. And in this case it isn't 'Apple', it's companies that go above a specific limit.
    Taxing revenues is unheard of.
    Sales tax is unheard of?  Where are you from?
    radarthekatGeorgeBMacspice-boy
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