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France orders tech giants to pay digital tax

France last year applied a 3 percent levy on revenue from digital services earned in France but suspended collection of the tax.
An Amazon distribution on April 25, 2020, in Las Vegas.David Becker / AFP - Getty Images file

The French Finance Ministry has sent out notices to big tech companies liable for its digital service tax to pay the levy as planned in December, the ministry said on Wednesday.

France suspended collection of the tax, which will hit companies like Facebook and Amazon, early this year while negotiations were underway at the Organisation for Economic Cooperation and Development on an overhaul of international tax rules.

The Finance Ministry has long said it would collect the tax in December as planned if the talks proved unfruitful by then, which is what happened when the nearly 140 countries involved agreed last month to keep negotiating until mid 2021.

“Companies subject to the tax have received their notice to pay the 2020 installment,” a Finance Ministry official said.

France last year applied a 3 percent levy on revenue from digital services earned in France by companies with revenues of more than 25 million euros here and 750 million euros worldwide.

The ministry had hoped to raise about 500 million euros this year from the tax, but the 2021 budget bill puts the figure at 400 million.

Facebook’s stance is “is to ensure compliance with all tax laws in the jurisdictions where we operate.” Other tech companies have made similar statements.

Paris has said it will withdraw the tax as soon as an OECD deal is reached to update the rules on cross-border taxation for the age of online commerce, where big internet companies can book profits in low-tax countries regardless of where their customers are.

The talks stalled as the Trump administration became reluctant to sign on to a multilateral agreement ahead of the U.S. presidential election while the global pandemic added to practical difficulties in the negotiations, officials have said.

“We will levy this digital taxation mid December as we always explained to the U.S. administration,” French Finance Minister Bruno Le Maire told a Bloomberg event on Monday.

“Our goal remains to have an OECD agreement by the first months of 2021 because we remain deeply convinced that ... the best way of dealing with this key question of digital taxation is to get a multilateral agreement within the framework of the OECD,” he added.