US Tech Giants Testify Against French Digital Tax

Google, Amazon, Facebook and other major Silicon Valley companies are to testify at a US government hearing against a new French digital tax.

Envoys from Google, Amazon and Facebook are to testify before the US Trade Representative (USTR) in Washington, along with a lawyer representing Airbnb, Expedia, Salesforce, Microsoft, Stripe, Twitter and other tech firms.

Jennifer McCloskey, vice president for policy at Information Technology Industry Council, is to testify on behalf of  Amazon, Facebook, Apple, Google and others.

France’s Digital Services Tax (DST), which is similar to those being considered in the UK and elsewhere, imposes a 3 percent levy on revenues for companies that have a minimum of 25 million euros (£23m) in annual sales in France.

‘Fiscal justice’

The levy, which applies only to tech firms with total revenues of more than 750m euros globally, was approved by the French Senate in July and is to apply retroactively from 1 January 2019.

France’s finance minister Bruno Le Maire said it would affect about 30 companies, mostly US-based firms, but also China’s Alibaba, Germany’s Springer and French advertising group Criteo.

The French government has said the initiative aims to address “above all a question of fiscal justice”, estimating it will bring in some 400m euros this year and 650m euros in 2022.

In July the US administration ordered an investigation into the proposed tax and said it could institute retaliatory tariffs on some French imports.

The USTR said in a public notice the tax was “unreasonable”, pointing out that it targets revenues rather than profits and disproportionately affects US firms.

Facebook, Amazon and Google have submitted written evidence to support the USTR probe, with Peter Hiltz, Amazon’s director of international tax policy and planning, saying the DST is “harmful” and “discriminatory” and would apply to a “small number of almost entirely non-French companies”.

Burden

Amazon said the tax it plans to increase fees for third-party sellers in France by 3 percent to compensate.

Facebook’s head of global tax policy Alan Lee said the firm “strongly” supports the USTR investigation and that it would be complicated for Facebook to comply with the new laws.

Google said the rules were “likely to generate disputes on whether specific digital activities were ‘supplied in France’ or in another region”.

The Computer and Communications Industry Association (CCIA) has estimated the tax will largely be paid by consumers and by the enterprises who use the digital services in question, with only 5 percent borne by the service providers themselves.

Along with the UK, Austria, Germany, Spain and Italy are amongst those considering a similar tax.