France is once again introducing controversial digital taxes

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The French Ministry of Economic Affairs announced on Wednesday that the so-called gafa tax, the tax for large tech companies such as Google, Amazon, Facebook and Apple, will also be introduced this year. However, the United States had threatened to impose criminal charges on, among other things, handbags and make-up.

Google, Amazon, Facebook and Apple, collected under the acronym gafa, dominate the internet, but pay little tax on the profits they make here from this dominance. In addition, they are located in tax-favorable places such as Ireland and Luxembourg. The OECD, the Organization for Economic Co-operation and Development, is currently working on a plan to make these tech giants pay more taxes at the local level. That plan normally had to be ready this year, but the deadline has been postponed due to the corona crisis.

Just like in 2019, France now decides not to wait for the OECD’s plan and is levying taxes on the internet giants itself. Companies that are subject to this tax have received a tax assessment, it concerns advance payments for the year 2020. Last year, the French tax yielded some 350 million euros.

Such a digital tax was a thorn in the side for US President Donald Trump. According to him, the charges would mainly affect the large American tech groups and would be disproportionate. The US government therefore drew up a list of products from France on which it would collect 25 percent additional import duties, such as handbags and cosmetic products. At the beginning of this year, Trump did reach an agreement with French President Macron and they decided to wait for the OECD agreement. How the US will now react to this decision by France remains to be seen.

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