12/04/19

FRANCE: French Lawmakers Advance Law to Ramp Up Tax Revenue From US Tech Giants.

As published on cnsnews.com, Thursday 11^th April, 2019.

 

With the rest of Europe watching – and largely sceptical – French lawmakers this week passed a bill designed to compel tech giants like Google and Apple to pay higher taxes than they do at present.

The aim of the so-called GAFAM law, named for Google, Apple, Facebook, Amazon and Microsoft, is to have the companies pay in taxes up to three percent of their turnover in France, from areas like online advertising, resale of data, and matching commissions.

Economy Minister Bruno Le Maire has estimated that the new taxes would bring in around $449 million this year.

The measure says companies with a worldwide turnover of at least $843 million, and turnover in France for digital activity of more than $28 million, will have to pay higher taxes. French media report that, if the Senate approves the law, about 30 companies will be affected.

Le Maire’s ministry called the text “simple and effective” but critical political parties and non-governmental organizations said it was complex and risky.

Laurent Wauquiez, head of the centre-right Republicans party, expressed concern about the impact of the tax on consumers. Most Republicans present voted for the bill, although only a minority of President Emmanuel Macron’s Republic in Motion movement did.

For some it didn’t go far enough. Communist lawmakers said the legislation would not stop tax evasion, and the leftist Rebellious France movement, having tried unsuccessfully to extend the scope of the tax, said it would “not restore social justice for our country.” Its members abstained.

But after the vote, Socialist party lawmakers told media they supported a bill “that is going in the right direction.”

Current E.U. laws allow companies to declare all their European income in a single member state. Many therefore do that in low tax countries, such as Ireland, where Apple, Facebook, and Google have their European headquarters, and the Netherlands, where Facebook and Uber have theirs.

“As these companies and others are not headquartered in France, where they only maintain an office, they are not subjected to the same taxes as those that are registered in France,” said Dominique Plihon, a spokesman for ATTAC, a leftist anti-globalization group.

He said his group and allied NGOs oppose the law because it “does not tackle the problems of tax evasion, and these companies will be taxed very little.”

According to a new ATTAC report, that’s because the new law only applies to digital turnover – and not, for example, to the sale of software, phones and other devices, or other products.

“Nearly two-thirds of the cumulative revenue of the five giants, Facebook, Google, and especially Apple, Amazon, and Microsoft, are from mostly non-digital activity which will not be covered by the tax,” it said.

For now, France is the only E.U. country to be pursuing such a move, although Austrian Chancellor Sebastian Kurz said late last year his country would do the same, and Britain last October announced plans to implement by 2020 a similar regime, affecting companies whose global turnover exceeds $653 million.

But most E.U. countries are opposed to the idea, fearing U.S. retaliatory action.

The E.U.’s executive Commission last year proposed a bill which, in the words of Commissioner for Economic and Financial Affairs Pierre Moscovici, would make it possible to tax a company that has a “digital presence” in a particular country, “even in the absence of a physical presence” in that country.

“A platform will be considered to have a taxable presence in a state if it fulfills one of the following three criteria yearly: $7.8 million in turnover, 100,000 users, or 3,000 contracts or accounts created,” he told the French newspaper Le Figaro at the time.

Ireland, Denmark, and Sweden criticized the proposed bill.