Saturday, 11 September, 2021

Taxe Gafa : « Black Monday » ?


The Trump administration is expected to vote on possible sanctions against France, after the expected publication on Monday of the findings of the investigation into the French Gafa tax.

France had expected a suspension of the investigation into the Gafa tax at the end of the G7 in Biarritz.

The office of the United States Trade Representative (USTR) is expected to publish its investigation report on the tax introduced this summer by France on digital services, which affects some forty companies including Gafa, on Monday. According to a source familiar with the matter, France had expected a stay of proceedings before the USTR following the G7 in Biarritz. However, this was not the case and the 90-day deadline expires on Monday.

The battle behind the introduction of this tax goes beyond the bilateral United States / France. The economy is digitizing at high speed, the personal data of citizens is used and valued through advertising by digitized companies. Countries like France are seeing their tax base shrink and their ability to finance their public services shrink over time as digital giants reach market valuations the size of budgets in developed countries. The stake of this taxation is not only a subject of tax justice, it poses a democratic problem.

Wave of sanction

The frenzy observed around Black Friday shows that the digital giants are part of the daily life of the French. Ironically, it is when, for the first time, these companies will have to pay the tax on digital services put in place by the law of July 2019 (400 million euros in tax revenue expected in 2019) that the United States could on Monday trigger a second wave of sanctions against France, after that arising from the commercial dispute between Airbus and Boeing.

The American administration accuses France of opening the door to an increase in national taxes “in leopard skin” which will hit certain American companies. Digitized companies have adopted a purely defensive position without succeeding in blocking the progress made on the taxation of digital services at the OECD. A compromise position was reached in October between 134 participating countries including the United States and France.

Innovative principles

The OECD has worked on innovative principles that will allow companies to be taxed which, until now, escaped the qualification of permanent establishment due to the absence of a physical presence. First innovation, it is not the turnover that will be taxed as provided by French law (up to 3%) but the extra profits. Second innovation, companies will be taxed according to their “active presence in their markets” through the base of consumers or users of their services.

If such a fairer and more comprehensive system were to see the light of day, France would have a lot to do with it. By having decided to take the lead with national taxation, it has accelerated awareness and work within the OECD… At the cost of trade sanctions?

The Trump administration is expected to vote on possible sanctions against France, after the expected publication on Monday of the findings of the investigation into the French Gafa tax.

France had expected a suspension of the investigation into the Gafa tax at the end of the G7 in Biarritz.

The office of the United States Trade Representative (USTR) is expected to publish its investigation report on the tax introduced this summer by France on digital services, which affects some forty companies including Gafa, on Monday. According to a source familiar with the matter, France had expected a stay of proceedings before the USTR following the G7 in Biarritz. However, this was not the case and the 90-day deadline expires on Monday.

The battle behind the introduction of this tax goes beyond the bilateral United States / France. The economy is digitizing at high speed, the personal data of citizens is used and valued through advertising by digitized companies. Countries like France are seeing their tax base shrink and their ability to finance their public services shrink over time as digital giants reach market valuations the size of budgets in developed countries. The stake of this taxation is not only a subject of tax justice, it poses a democratic problem.

Wave of sanction

The frenzy observed around Black Friday shows that the digital giants are part of the daily life of the French. Ironically, it is when, for the first time, these companies will have to pay the tax on digital services put in place by the law of July 2019 (400 million euros in tax revenue expected in 2019) that the United States could on Monday trigger a second wave of sanctions against France, after that arising from the commercial dispute between Airbus and Boeing.

The American administration accuses France of opening the door to an increase in national taxes “in leopard skin” which will hit certain American companies. Digitized companies have adopted a purely defensive position without succeeding in blocking the progress made on the taxation of digital services at the OECD. A compromise position was reached in October between 134 participating countries including the United States and France.

Innovative principles

The OECD has worked on innovative principles that will allow companies to be taxed which, until now, escaped the qualification of permanent establishment due to the absence of a physical presence. First innovation, it is not the turnover that will be taxed as provided by French law (up to 3%) but the extra profits. Second innovation, companies will be taxed according to their “active presence in their markets” through the base of consumers or users of their services.

If such a fairer and more comprehensive system were to see the light of day, France would have a lot to do with it. By having decided to take the lead with national taxation, it has accelerated awareness and work within the OECD… At the cost of trade sanctions?