World news
4 September 2019

American digital giants strongly object to French tax

In July, the Office of the US Trade Representative initiated an investigation into the digital tax recently introduced in France. The USA have expressed concern that the implemented tax unfairly targets mainly American digital companies. The office therefore launched an inquiry into the impact of the French tax to determine whether American business activities are indeed discriminated against or even restricted.

Luděk Vacík
Simona Schořová

In connection with the pending inquiry, the representatives of Google, Apple, Facebook and Amazon were heard out during August. Moreover, Airbnb, Amazon, Facebook, Google, Microsoft and Twitter issued a joint declaration stating that the digital tax in France is “unjustifiable, as it violates international treaties, and unreasonable, as it is discriminatory, retroactive and inconsistent with international tax policy principles”. They also assert that, among other things, the tax will obstruct the development of the digital economy and overall cause problems for the business models of digital companies. In a written statement representing the American giants, the Information Technology Industry Council further stated that expenses for this tax will primarily be borne by the end customers within the customer-supplier chain.

The question is what will happen should the inquiry’s outcome confirm the restrictive impact of the French digital tax on digital companies. The US could propose the introduction of retaliatory duties or search for another solution in cooperation with the World Trade Organisation. This initiative is obviously supported by the US president who has made clear that significant reciprocal measures will be adopted in response to the introduction of the French digital tax, such as additional customs duties imposed on goods of French origin (including French wine, a favourite export product).

According to reports from the G7 summit taking place on 24 to 26 August 2019, the representatives of both countries may have agreed on measures mitigating the impact of the French tax on American companies.

 

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