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November 26, 2020

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France set to impose 2020 ‘digital tax’

France will require online technology giants to pay a new “digital tax” on their 2020 earnings, the finance ministry said yesterday, despite Washington’s warning that it could retaliate with new tariffs on French imports.

“The companies subject to this tax have been notified,” a ministry official said, referring in particular to United States firms Google, Amazon, Facebook and Apple, which the US says are being unfairly targeted by the levy.

The French move risks escalating a long-running fight over how to make American tech multinationals pay a larger share of their taxes in the countries where they operate.

Under European Union law, American companies can declare their profits from across the bloc in a single member state — in most cases low-tax jurisdictions such as Ireland or the Netherlands.

Under pressure to take a harder line, France enacted its digital tax in 2019, which calls for a 3 percent levy on the profits from providing online sales for third-party retailers, as well as on digital advertising and the sale of private data.

But Paris reached a deal with the administration of President Donald Trump to suspend the tax while seeking a global digital tax deal through the Organization for Economic Cooperation and Development.

Trump has warned of punitive 25 percent duties on US$1.3 billion worth of French products, including cosmetics.

In October, the OECD admitted it would not reach a deal on a new global standard for taxing digital firms this year, largely because of US opposition.


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