PARIS – The Socialist government of French President Emmanuel Macron is pushing ahead with a landmark tax on tech giants such as Google and Facebook. Despite US President Donald Trump’s threats of retaliatory tariffs on French wine.
Pres. Trump slammed the “foolishness” of the tax in a tweet and promised reciprocal action, French Finance Minister Bruno Le Maire said “France will implement” it anyway.
“The universal taxation of digital activity is a challenge that concerns us all,” said a statement released on Saturday by Le Maire’s office.
He said the tax is meant as a temporary measure pending negotiations on an international tax deal.
The 3% tax, which went into force this week, mainly concerns companies that use consumer data to sell online advertising.
It’s designed to stop multinationals from avoiding taxes by setting up European headquarters in low-tax EU countries such as Ireland and Luxembourg.
US Tech Giants
Currently, companies such as Google, Amazon, Facebook, Apple, Airbnb and Uber pay very little tax on their significant business in countries like France.
The Trump administration says the tax is discriminatory against US business.
But the tax targets any digital company with yearly global sales worth more than (US$835 million) and French revenue exceeding ($27 million).
It should affect about 30 companies, based in the US, China and Europe — including France.
The revenue threshold is supposed to allow more room for startups. France argues that tech giants are abusing their market dominance, notably through tax avoidance, and preventing others from a fair chance of competing.
Also, the tax concerns only revenues earned in France — not sales in the US or elsewhere.
US Trade Representative Robert Lighthizer began an investigation earlier this month to determine whether the tax is discriminatory or unreasonable and restricts US commerce.
Such a finding would allow Trump to levy retaliatory tariffs.
Trump derided French wines in his tweet, and later said he might hit them with retaliatory tariffs to French. He made a similar threat last year.
After initially befriending the US president despite their starkly different world views, Macron has increasingly stood up to the impulsive, America-first Trump on trade, climate change and Iran’s nuclear program.
The tech tax is just their latest battleground, and will be a key point of tension when the two men meet at a Group of Seven summit in France next month.
France failed to persuade European Union partners to impose a Europe-wide tax on tech giants, but is now pushing for an international deal with the G7 and the 34 countries of the Organization for Economic Cooperation and Development.