A compromise solution was reached between the United States and France over the issue of the European nation imposing a new tax on large digital companies which have engulfed a number of United States based companies such as Google and Facebook. The US had taken exception of the new French tax on large digital companies and the tussle had even taken such proportions that analysts were concerned that it could result in a trade conflict between the two countries.
The agreement reached between the two countries now will mandate France paying back the difference between the digital tax that it has imposed and any taxes that would emerge from a planned mechanism for taxing digital companies all across the world being prepared by the Organization for Economic Cooperation and Development (OECD), to the companies, said a spokesperson for France's Finance Ministry
"We have reached a very good agreement," French President Emmanuel Macron said at a joint press conference with US President Donald Trump at the G7 summit in Biarritz, France on Monday. "These large multinational players that don't pay taxes, that leads to significant instability on the economic front that is not fair."
Macron prefers drawing up and implementing a globally applicable taxation rules for digital companies and if an when they are drawn up Macron said, "France will do away with its national tax."
According to the new digital tax imposed by France imposed last month, revenues generated by the larger digital companies from France would be taxed at 3 per cent. The businesses range from companies collecting vast amounts of user data and using the data for selling of targeted advertisement. Only those companies that generate revenues of more than €25 million or about $27.7 million in France, or €750 million or about $830 million globally would fall in the new tax bracket.
However, a threat of a retaliatory tax, arguably on French wine exported into the US, had become a possibility after the US administration reacted strongly against the tax which it claimed was targeted at large US companies such as Google and Facebook. A so-called Section 301 investigation in July was initiated by the Office of the United States Trade Representative which was to look into whether the new tax amounted to unfair trade practices on the part of France. Trump even threatened to push back by taxing French wine.
"We tax our companies, they don't tax our companies," Trump said last month.
The argument that the new tax had targeted American companies in an unfair manner was made by tech companies, including Google and Amazon. Amazon announced last week at a hearing in Washington that it will pass on the impact of the new French digital tax to the third party sellers starting October 1.
The new French digital tax was not meant to target specific companies, Macron said speaking at the press conference on Monday and added that it had also impacted many French businesses.
(Source:www.cnn.com)
The agreement reached between the two countries now will mandate France paying back the difference between the digital tax that it has imposed and any taxes that would emerge from a planned mechanism for taxing digital companies all across the world being prepared by the Organization for Economic Cooperation and Development (OECD), to the companies, said a spokesperson for France's Finance Ministry
"We have reached a very good agreement," French President Emmanuel Macron said at a joint press conference with US President Donald Trump at the G7 summit in Biarritz, France on Monday. "These large multinational players that don't pay taxes, that leads to significant instability on the economic front that is not fair."
Macron prefers drawing up and implementing a globally applicable taxation rules for digital companies and if an when they are drawn up Macron said, "France will do away with its national tax."
According to the new digital tax imposed by France imposed last month, revenues generated by the larger digital companies from France would be taxed at 3 per cent. The businesses range from companies collecting vast amounts of user data and using the data for selling of targeted advertisement. Only those companies that generate revenues of more than €25 million or about $27.7 million in France, or €750 million or about $830 million globally would fall in the new tax bracket.
However, a threat of a retaliatory tax, arguably on French wine exported into the US, had become a possibility after the US administration reacted strongly against the tax which it claimed was targeted at large US companies such as Google and Facebook. A so-called Section 301 investigation in July was initiated by the Office of the United States Trade Representative which was to look into whether the new tax amounted to unfair trade practices on the part of France. Trump even threatened to push back by taxing French wine.
"We tax our companies, they don't tax our companies," Trump said last month.
The argument that the new tax had targeted American companies in an unfair manner was made by tech companies, including Google and Amazon. Amazon announced last week at a hearing in Washington that it will pass on the impact of the new French digital tax to the third party sellers starting October 1.
The new French digital tax was not meant to target specific companies, Macron said speaking at the press conference on Monday and added that it had also impacted many French businesses.
(Source:www.cnn.com)
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