France's new digital tax directed at 'big tech' and online retail giants

France’s new digital tax will see big tech and retail giants including Amazon be forced to pay taxes for its French sales and operations.

Despite a looming threat of an American retaliation on French products including handbags and cosmetics, the French government confirmed to the Financial Times “the companies subject to this tax have received a tax notice for the payment of the 2020 advances” and “will pay the balance in 2021”.

In Washington the tax is seen as an unfair trade practice “because it largely affects US companies, threatens to reignite the transatlantic trade tensions and trigger new tariffs on Europe weeks ahead of the inauguration of Joe Biden,” wrote the FT.

The new tax equates to 3 percent on the turnover of groups exceeding 750 million euros. A Europe-wide digital tax is likely to follow. “France has said it wants an EU proposal in early 2021 for taxation of digital services across Europe in case the OECD talks continue to make no progress. But its preferred option remains an international solution through the organisation.”

“We can’t wait any longer and the tech companies are the big winners of the pandemic,” one French official told the FT. “Their turnover is soaring and they haven’t been paying fair taxes even before the pandemic.”

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