Over the past two decades, some of the biggest tech companies in the world originated in the United States, but it was not long before those companies expanded into the rest of the world. As long as those companies operating in the United States, they were governed by tax laws in their native country. However, once those companies started operating in almost all countries, those companies came under the purview of the tax laws in those countries. Amazon, Google, and Facebook now have their operations in almost every country, including France and a tax in the European nation has become a bone of contention.
The tax in question is the Digital Service Tax that was introduced by the French government last month and according to the provisions of the law, a 3% tax is going to be imposed on revenues generated by companies in France. That being said, it is going to only apply to companies which generate global revenue of 750 million Euros and revenues of 25 million Euros in France. Needless to say, it applies to all of Google, Amazon, and Facebook, which have sprawling operations in the country and generate plenty in revenues. The office of the US Trade Representative called the tax ‘unreasonable’, while the tax policy director at Amazon stated that such a tax is going to raise the price of American products that are going to be sold in France. Now, the three companies are going to testify in the United States against the law.
However, it is important to note that in addition to the three companies, Airbnb, Microsoft, Expedia, and Twitter have also expressed their reservations about the tax. The seven companies sent a joint letter to the US Trade Representative with regards to the tax and stated that,
[Digital Services Tax] is unjustifiable in that it infringes international agreements, and unreasonable in that it is discriminatory, retroactive and inconsistent with international tax policy principles.
On the other hand, the United States President Donald Trump has also expressed his distaste for such a tax and after the tax was announced, the White House had released a statement regarding the development. In the statement, the White House said,
France’s unilateral measure appears to target innovative U.S. technology firms that provide services in distinct sectors of the economy.