France is pushing ahead with its digital tax. An effort to impose a discriminatory levy on American companies like Google, Apple, Facebook, and Amazon. Despite an earlier agreement between French President Macron and U.S. President Trump to hold off on unilateral actions and wait for an international tax reform effort to find a solution.
French Finance Minister Bruno Le Maire said to Reuters:
“Never has a digital tax been more legitimate and more necessary. In any case, France will apply as it has always indicated a tax on digital giants in 2020 either in an international form if there is a deal or in a national form if there is no deal.”
France tries to blame the coronavirus outbreak for its surprising move to abandon the agreement with the U.S. reached earlier. However, Bruno Le Maire is wrong: Now is not the time to impose a discriminatory tax on digital companies, especially as people are staying at home and are relying on digital innovation and products more than ever.
A U.S. retaliation will be strong, badly hurt the already tanking French economy, and greatly damage the transatlantic relationship.
Initially, the so-called GAFA tax ( Google, Apple, Facebook, Amazon) was proposed in December of 2018 and would apply 3% on revenue generated by digital companies in France.