US and France Reach Digital Tax Deal
The United States and France have come to an agreement over the French tax on big tech companies, French President Emmanuel Macron said on Monday. He added that France would eliminate its 3 percent tax once the Organization for Economic Cooperation and Development reaches a multilateral agreement on taxation in the digital era. When that new agreement is in place, the companies that have been affected by France’s tax will be reimbursed.
“We’ve done a lot a work on the bilateral basis, we have a deal to overcome the difficulties between us,” Macron said, speaking alongside U.S. President Donald Trump following the G7 summit in France.
The tax was geared towards firms with annual revenues exceeding 750 million euros ($830 million) from “digital activities,” including 25 million euros ($27 million) made in France. Around 30 major tech companies that provide digital services to French users were impacted by the 3 percent tax including Facebook, Amazon, and Google. The U.S. felt that the tax “unfairly targeted American companies,” prompting President Trump to threaten tariffs on French wine in retaliation.
France just put a digital tax on our great American technology companies. If anybody taxes them, it should be their home Country, the USA. We will announce a substantial reciprocal action on Macron’s foolishness shortly. I’ve always said American wine is better than French wine!
— Donald J. Trump (@realDonaldTrump) July 26, 2019
A few weeks ago, Google, Facebook, Amazon and others testified at a U.S. government hearing on the French government’s digital services tax. Airbnb, Amazon, Expedia Group, Facebook, Google, Microsoft and Twitter released a joint statement to the USTR saying the tax “is unjustifiable in that it infringes international agreements, and unreasonable in that it is discriminatory, retroactive and inconsistent with international tax policy principles.”
The Organization for Economic Cooperation and Development is currently devising a long term solution to the digital taxation that they are aiming to put into place by the end of 2020.