U.S., France reach new compromise on digital tax

By Ian Krietzberg
Correspondent

France, under the advisement of the French Finance Minister Bruno Le Maire, established a 3-percent international tax in July that affects many large tech companies, including Google, Amazon and Facebook. The tax only affected companies earning more than $830 million from “digital activities,” which refers to the collection and subsequent sale of personal user information, according to CNBC on Aug. 26.

CNN reported that the agreement is an aversion to a potential trade conflict. Following complaints and threats by President Donald Trump to impose a tariff on French wine in response to the digital tax, French President Emmanuel Macron defended the tax at his joint press conference with Trump, saying that it’s “‘not against any company in particular, it’s just to solve the problem.’” 

Trump threatens to implement a French wine tax (YouTube).

Macron met with Trump to work out a compromise, which ended up involving a planned taxation mechanism established by the Organization for Economic Cooperation and Development. According to The Hill, under this compromise, France will abolish its digital tax and reimburse any companies that have already paid.

“‘The idea is to find a joint agreement in order to address joint international problems,’” Macron said at his joint press conference with Trump, according to The Hill. “‘The situation right now is very negative, and the international tax system definitely needs to be modernized.’”

According to Reuters, Macron pushed hard for a digital tax in 2018 — one that would affect all members of the European Union. 

A December 2018 New York Times article reported that many nations in the EU already had or were considering a form of digital taxation. However, no union-wide policies were introduced due to resistance from low-tax countries.

According to the same New York Times article, Le Maire was quoted saying that the “‘tax will be introduced no matter what on January 1, and it will be for the whole of 2019.’”

CNN reported that the leaders at the Summit on Financial Markets and the World Economy, more commonly known as the G20 summit, hope that a new agreement on the tax plan will be signed by 2020, although implementation of it could be years away. 

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