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Why did France impose a tax of American e-commerce giants?

Why did France impose a tax of American e-commerce giants?
Asked by
James Mason categorie-icon time-icon3 months ago
1 Answer Answer Question

Lillian McKenna
Answered time-icon3 months ago

The French Government has approved a bill that imposes a 3% tax on tech companies that are not headquartered in France but generate 25 million euros in sales from within the country’s borders.

The law was passed earlier today and applies to foreign companies with revenues of at least 750 million euros ($850m) and will be backdated to affect revenues generated since January 2019.

The Trump administration had opposed the new tax saying that it is an unfair law that specifically targets American companies such as Alphabet Inc. (NASDAQ:GOOGL) and Facebook Inc. (NASDAQ:FB).

The move is in line with European Commission estimates that companies headquartered in the EU pay approximately 23% in taxes, while tech companies based outside the economic block generally pay a meagre 8-9% in taxes on revenues generated in the EU.

The American Government has ordered an investigation into the tax, which is set to affect 30 American companies as well as other Spanish, German and Chinese firms that generate sales in the country despite not having a physical presence there.

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