France has recently ratified a 3% digital service tax on tech giants. This digital tax has received a strong backlash from the US as the United States believes France is discriminatorily targeting American tech companies. The US administration is investigating this at the moment and would possibly hit back by imposing similar tariffs. France, on the other hand believes, these tech giants pay negligible or no tax at all and is the first among the major economies to levy tax on the internet behemoths.
This tax will be imposed on digital companies with global annual sales of more than 750 million euros of which sales in France should reckon at least 25 million euros. As per BBC- the European Commission estimates that on average traditional businesses face a 23% tax rate on their profits within the EU, while internet companies typically pay 8% or 9%.France has long argued that taxes should be based on digital, not just physical presence.
Economy Minister of France Le Maire said this tax scheme would target about 30 companies, most of which are American and include the internet giants – Google, Apple, Facebook and Amazon. “We are merely re-establishing fiscal justice. We want to create taxation for the 21st century that is fair and efficient,” he said.