France orders tech giants to pay the digital tax

    PARIS (Reuters) – France’s finance ministry has sent notices to large tech companies responsible for its digital services tax to pay the tax as scheduled in December, the ministry said Wednesday.

    France has suspended collection of the tax, which will affect similar companies Facebook and Amazon, earlier this year while negotiations were underway at the Organization for Economic Co-operation and Development on a review of international tax rules.

    The finance ministry has long said it would collect the tax in December as planned if the talks proved unsuccessful, as happened when the nearly 140 countries involved agreed last month to continue negotiations until mid-2021.

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    “The companies subject to the tax have received the payment notice of the 2020 installment,” said an official from the Ministry of Finance.

    Last year France applied a 3% tax on revenue from digital services earned in France by companies with a turnover of over 25 million euros here and 750 million euros worldwide.

    The ministry hoped to raise around 500 million euros this year from the tax, but the 2021 budget bill puts the figure at 400 million.

    Facebook’s position is “is to ensure compliance with all tax laws in the jurisdictions in which we operate.” Other tech companies have made similar claims.

    Paris said it will withdraw the tax as soon as an OECD agreement is reached to update cross-border taxation rules for the era of online commerce, where large internet companies can book profits in low-tax countries regardless of where their businesses are located. clients .

    Talks stalled as the Trump administration became reluctant to sign a multilateral agreement ahead of the US presidential election, as the global pandemic added to practical difficulties in the negotiations, officials said.

    “We will apply this digital taxation in mid-December, as we have always explained to the US administration,” French Finance Minister Bruno Le Maire said at a Bloomberg event on Monday.

    “Our goal remains to obtain an OECD agreement by early 2021 because we remain deeply convinced that … the best way to address this key issue of digital taxation is to obtain a multilateral agreement within the OECD framework,” he added. .

    Reporting by Leigh Thomas; Editing by Giles Elgood

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