France levies a digital service tax on Internet giants and the United States announces an investigation

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 France levies a digital service tax on Internet giants and the United States announces an investigation


Xinhua News Agency News: The U.S. Office of Trade Representatives announced on the 10th that it would launch an investigation into the French Digital Service Tax in accordance with Article 301 of the 1974 Trade Law of the United States.

Background Introduction:

Peoples Daily (July 03, 2019, 17th edition)

France plans to impose a digital tax on Internet giants

Gwenbo, our French correspondent

The French Senate recently voted to pass a draft law that levies a digital tax on large Internet companies. According to the draft, since January 1, 2019, more than 30 global digital businesses, such as Google, Amazon and Facebook, will have revenues of not less than 750 million euros, while Internet companies with revenues of more than 25 million euros in France will be levied a digital tax equivalent to 3% of their turnover in France.

French Minister of Economy and Finance Lemmel said that the imposition of digital tax is a strong signal from France that France pursues fiscal fairness. In March 2018, the European Commission proposed that EU countries unify a tax on Internet giants at 3% of their turnover to combat the use of loopholes in EU tax laws to transfer profits to low-tax countries. France, Germany, Britain and other countries fully supported and actively lobbied for this, but were resisted by Denmark, Finland, Ireland, Sweden and other countries. These countries have attracted a large number of Internet companies to transfer profits to them because of their low corporate tax rates. The bill was rejected at the meeting of EU finance ministers.

In view of the difficulty in promoting the formation of a common position of the European Union, France has turned to promoting domestic legislation and hopes to use it as a lever to promote the formation of a unified legal text within the Organization for Economic Cooperation and Development. Lemel said France would immediately repeal its domestic law once the OECD reached a consensus on the issue of digital taxation.

The French Digital Media Development Forum pointed out that with the help of tax base transfer and its strong market position, large Internet enterprises in the world not only put the local enterprises in a disadvantage in competition, but also caused serious damage to the tax interests of Europe. According to estimates, the total amount of tax paid by Internet giants in France is less than 50 million euros. After the implementation of the bill, the French governments revenue from digital tax in 2019 is expected to be 400 million euros, which will reach 650 million euros by 2022. At present, there are still many differences on the bill in France. For example, some members of the French Republican Party have proposed that the bill lacks the support of international tax principles and EU treaties. Taxation based on turnover rather than profit may have a negative impact on the development of French Internet enterprises. The bill passed by the Senate is valid for four years because of concerns that the tax law may increase the burden on Internet companies in the country. In accordance with the legislative procedure, the Senate will form a joint committee with the National Assembly to review and negotiate the specific provisions of the bill again, and then enact a formal law after reaching an agreement. (Paris Telegraph) Source of this article: Xinhua responsible editor: Wang Fengzhi_NT2541

The French Digital Media Development Forum pointed out that with the help of tax base transfer and its strong market position, large Internet enterprises in the world not only put the local enterprises in a disadvantage in competition, but also caused serious damage to the tax interests of Europe. According to estimates, the total amount of tax paid by Internet giants in France is less than 50 million euros. After the implementation of the bill, the French governments revenue from digital tax in 2019 is expected to be 400 million euros, which will reach 650 million euros by 2022.

At present, there are still many differences on the bill in France. For example, some members of the French Republican Party have proposed that the bill lacks the support of international tax principles and EU treaties. Taxation based on turnover rather than profit may have a negative impact on the development of French Internet enterprises.

The bill passed by the Senate is valid for four years because of concerns that the tax law may increase the burden on Internet companies in the country. In accordance with the legislative procedure, the Senate will form a joint committee with the National Assembly to review and negotiate the specific provisions of the bill again, and then enact a formal law after reaching an agreement.

(Paris Telegraph)