French Senate adopts national digital tax plan, Trump agrees on a truce with France
On 11 July, the French Senate approved the government’s proposed digital tax that would impose a 3% turnover levy on over 30 digitalised businesses – including major US ones such as Google, Facebook and Amazon.
The US reacted to the measure with outrage and threatened France with possible trade restrictions on French wine imports.
The US digital businesses argue that the tax is discriminatory. However, they also urged France and the US to avoid escalating trade tensions.
Amazon France announced on 1 August that it would increase its referral fees in direct response to the French digital tax.
In the aftermath of the 26 August G7 leaders’ summit in Biaritz, France and the US reached a compromise that will leave the French tax in place until OECD agrees on an international solution.
According to the compromise, France would reimburse to the companies any difference between the French tax and an eventual OECD agreement.
US digital sector companies denounced the compromise soon afterwards.
France is not alone
France is not alone in introducing unilateral digital tax measures.
Over 10 countries are planning similar measures. See Accountancy Europe’s recent publication for an overview.
Most notably, the UK government re-iterated its own digital tax plans on the same day as the French Senate vote took place. This might hamper UK’s hopes for a post-Brexit trade deal with the US.
France to introduce flight tax, UK also discussing plans
France will reportedly introduce a tax on airlines flying from its airports from 2020. The tax is expected to generate EUR 180 million in revenue.
Similarly, the UK is planning to introduce a national flight tax in the form of a “carbon charge” to offset greenhouse gas emissions.