Published: Sun, July 14, 2019
Worldwide | By Isabel Fisher

USA to hold hearing on French tax investigation

USA to hold hearing on French tax investigation

In a joint statement they said: "The digital services tax that France and other European countries are pursuing is clearly protectionist and unfairly targets American companies in a way that will cost USA jobs and harm American workers".

"France is a sovereign country, its decisions on tax matters are sovereign and will continue to be sovereign", said French Finance Minister Bruno Le Maire. "I firmly believe that, between allies, we can and should be able to settle our differences without threats", reported Efe news.

Also on Thursday, Britain moved ahead with similar plans as the government published draft legislation for a "digital services tax". And a bigger dispute is unfolding about the very nature of national taxation regimes in an increasingly digitalised world.

And as more trade migrates to online platforms, there is no question that the U.S. retail giants are in a position to consolidate their advantage.

The Group of 20 has tasked the Organization for Economic Cooperation and Development with finding a fix in the worldwide tax system that has allowed some internet heavyweights to take advantage of low-tax jurisdictions in places like Ireland and pay next to nothing in other countries where they make huge profits.

An activist wearing a mask depicting Facebook chief executive Mark Zuckerberg in Belgium a year ago. France forecasts that the tax could bring in as much as €500m a year. These companies, protesters claimed, were destroying the country's traditional family-run shops. Such companies will have to pay a tax of 3 %, earning the French treasury an estimated 400 million euros this year alone.

And Britain will follow.

Some experts said the costs of compliance could add up for tech firms, especially if more European Union countries push through their own national taxes. "We have got to find a way of taxing the Internet giants", he said.

France is set to introduce an "eco-tax" for all flights from French airports, the government has said.

'The UK has always sought to lead in finding an global solution to taxing the digital economy, ' claims Financial Secretary to the Treasury and Paymaster General Jesse Norman.

The adoption of the law came as Britain unveiled draft legislation for a tax on digital giants, that would amount to 2.0 percent and reflect "the value derived from their United Kingdom users", the British government said. Some of Europe's small producers and retailers, who rely on the large Internet platforms to reach their customers, are also unhappy with the new tax. Chinese, German, Spanish and British firms will be affected by the tax too.

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