The French Government has gone ahead with its plans to slam a 3% tax on digital services generated by huge multinational companies.
This comes after the United States warned against it as they threatened to retaliate as it appeared the taxes were targeted towards US companies only.
The new regulation which imposes a 3% tax on any digital company with revenues in excess of $850 million or £670 million of which an estimated
€25 million is generated in France.
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The tax expected to generate about €400 million this year from close to 30 companies such as Alphabet, Apple, Facebook, Amazon and Microsoft including Criteo a French online advertising firm sits negatively with the United States.
The trade representative, Robert Lighthizer has disclosed that an investigation will ensue to verify the authenticity of the move and on the flip side could also introduce punitive taxes on France from the United States.
The taxes were introduced as for such big corporations, their profits are only declared where they are headquartered and according to the European Commission, while traditional businesses pay 23% in taxes on their profits, digital companies pay within the 8% – 9% range and is not fair.
France’s argument is that taxes should not only be based on physical presence but on digital presence as well and has maintained that should a similar gesture practised globally, the taxes will end.