After freezing the tax on tech companies after receiving threats from the US, France decided to go ahead with its initial plan. Reuters confirmed that the French Ministry of Finance notified Amazon, Facebook and other companies that they will have to pay the digital tax in December.
Known as the Google rate, the tax on digital activities will be levied on companies such as Google, Facebook, Amazon and Apple. The European Union proposal, approved in countries such as Spain, France and the United Kingdom, consists of applying a rate of 3% to “online advertising services, online intermediation services and the sale of data generated from information provided by the user “.
While in Spain companies with revenues of more than 3 million euros will be taxed in the country and 750 million euros of total income, France does so with those that generate more than 25 million euros there. The decision to resume the digital tax in France comes after a brush with the Donald Trump administration in early 2020.
After the announcement of the start-up, the US president threatened to apply tariffs of up to 100% on imports of goods from France. The Macron government had to backtrack and freeze taxes, following a call with Donald Trump.
France said it would negotiate a review of international tax rules at the Organization for Economic Cooperation and Development (OECD). Now the French country is no longer afraid of retaliation and will apply its Gafa rate (which bears the initials of Google, Amazon, Facebook and Apple) this year.
Facebook and Amazon will respect the law and pay their taxes
After receiving the notice from the Ministry of Finance, the technology companies said they will comply with the law. While Facebook confirmed that its position is to ensure compliance with tax laws in the countries where they operate, Amazon did the same and assured that it has already received the reminder and will pay its taxes.
Bruno Le Maire, France’s Minister of Economy and Finance, said they will apply the digital tax in mid-December. On the other hand, the Government of Spain also gave the green light to the implementation of this rate and will begin its collection at the end of the year.
With a Donald Trump locked in a legal battle to prove that there was fraud in the presidential elections, issues such as the digital tax or the TikTok ban were left up in the air. Now the question of a possible reaction from Joe Biden haunts the minds of analysts.
While the president-elect may not approve the digital tax on his companies, he may conduct a less stark negotiation with the EU to reach a mutually favorable agreement.