France orders tech giants to pay digital tax

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France’s finance ministry has sent out notices to large tech companies liable for its own digital service tax to pay the levy as planned in December, the ministry has said.

France suspended collection of the tax, that will hit companies like Facebook and Amazon, early this year while negotiations were underway in the Organisation for Economic Cooperation and Development (OECD) within an overhaul of worldwide tax rules.

The finance ministry has long said it will collect the tax in December as intended if the talks proved unfruitful after that, and that’s 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 instalment,” a ministry official said.

France last year applied a 3% levy on revenue from digital services earned France by companies with earnings of more than 25 million euros there and 750 million euros global.

Facebook’s stance “is to ensure compliance with all tax laws in the jurisdictions where we operate”, it said, adding it had obtained its tax invoice from the French government.

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Amazon has obtained a reminder by the French authorities to pay the tax, and will comply, according to a individual familiar with the matter at the online merchant.

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 era of internet commerce, where large internet companies can reserve profits in low-tax countries irrespective of where their customers are.

The talks stalled since the Trump administration became hesitant to sign on to a multilateral arrangement, officials have said.

“We will levy this digital taxation mid December as we always explained to the US 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,” he said.

Dan Neidle, a partner at law firm Clifford Chance, was sceptical US President-elect Joe Biden would consent to such a bargain.

“I’m not sure why Biden would agree to something which enables US corporations to pay more tax in Europe and has not many benefits to the US,” said Neidle.

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The team at Platform Executive hope you have enjoyed this news article. Initial reporting via our official content partners at Thomson Reuters. Reporting by Leigh Thomas in Paris and Supantha Mukherjee in Stockholm. Editing by Mark Potter.

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