The Google unit of Alphabet, Facebook and Amazon.com are among the companies that will testify at a US government hearing on the French government digital services tax on Monday.
In July, the French Senate approved a 3 percent tax that will be applied to revenues from digital services obtained in France by companies with more than 25 million euros in French revenues and 750 million euros ($ 838 million) throughout the world.
The Office of the Trade Representative of the United States opened in July an investigation into the new tax that he described as “unreasonable.” The office could issue new tariffs on French products or other trade restrictions after the public comment period closes on August 26.
Amazon’s international fiscal policy director, Peter Hiltz, said in a written testimony to the USTR hearing that more than 10,000 small and medium-sized businesses based in France are selling at Amazon online stores and notified them that certain rates will increase 3 percent for sales made on Amazon.fr as of October 1.
He added that “US products and services sold through Amazon’s online store in France will cost more as a result” of the tax.
The tax in question is the Digital Service Tax that was introduced by the French government last month and in accordance with the provisions of the law, a 3% tax will be imposed on the income generated by companies in France. That said, it will only apply to companies that generate global revenues of 750 million euros and revenues of 25 million euros in France. It goes without saying that it applies to all of Google, Amazon and Facebook, which have expanding operations in the country and generate a lot of revenue. The office of the US Trade Representative UU. He described the tax as “unreasonable,” while Amazon’s fiscal policy director said that the tax will raise the price of US products that will be sold in France. Now, the three companies are going to testify in the United States against the law.
The testimony of Facebook’s global fiscal policy chief, Alan Lee, said the tax “poses difficulties for the Facebook business model and will hinder growth and innovation in the digital economy” and would require a reengineering of its systems.
He added that “while we can have the necessary data to calculate the tax, it would require additional time and resources to capture this data and keep it for these new fiscal and audit purposes.”
Google’s trade policy advisor, Nicholas Bramble, said in a written testimony that the French tax is “a sharp departure from long-established tax rules and is directed exclusively at a subset of
“and” companies are likely to generate disputes over whether specific digital activities were “supplied in France” or in another region. ”
Jennifer McCloskey, vice president of policy for the Information Technology Industry Council, which represents Amazon, Facebook, Apple, Google and many others, will testify on Monday that the tax “represents a worrying precedent, which unnecessarily departs from progress towards stable and long-lasting international fiscal policies and can disproportionately affect companies based in the United States. ”
The group added that “there is a high probability that the cost of the tax will be transferred to the supply chain.”
A group of companies, including Airbnb, Amazon, Expedia Group, Facebook, Google, Microsoft and Twitter, said in written comments to USTR that the tax “is unjustifiable because it violates international agreements and is unreasonable because it is discriminatory, retroactive and inconsistent. with principles of international fiscal policy “.
Last month, the president of the United States, Donald Trump, threatened to tax French wines on the tax. The White House said that “France’s unilateral measure seems to target innovative technology companies in the United States that provide services in different sectors of the economy.”
Other EU countries, such as Austria, Great Britain, Spain and Italy, have also announced plans for their own digital taxes.
They say a lien is needed because large multinational internet companies, such as Facebook and Amazon, make a profit in low-tax countries like Ireland, no matter where the revenue originates.