Despite warning by US, France says will apply 'digital tax' for 2020
- The 'digital tax' had been enacted in 2019.
- The new tax will have to be paid on 2020 earnings.
- Trump has warned of punitive duties of 25 percent on $1.3 billion worth of French products.
France will require online technology giants to pay a new 'digital tax' on their 2020 earnings, the finance ministry said on Wednesday, despite Washington's warning that it could retaliate with new tariffs on French imports, including the country's famed cosmetics and handbags.
"The companies subject to this tax have been notified," a ministry official said, referring in particular to the US firms Google, Amazon, Facebook and Apple, which the US says are being unfairly targeted by the levy.
The French move risks escalating a long-running debate over how American tech multinationals are to pay taxes, in countries where they operate. Under EU law, American companies can declare their profits from across the bloc in a single member state--usually low-tax jurisdictions such as Ireland or the Netherlands.
In a bid to take stronger action, France enacted its 'digital tax' in 2019, which calls for a three percent levy on the profits from providing online sales for third-party retailers, as well as on digital advertising and the sale of private data.
However, Paris later reached a deal with President Donald Trump's administration to suspend the tax, while seeking a global digital tax deal under the auspices of the Organisation for Economic Co-operation and Development (OECD).
In October, the OECD acknowledged that it would not reach a deal on a new global standard for taxing digital firms this year, primarily due US opposition to the proposals.