France Resumes Digital Tax on Facebook & Amazon

France has resumed the collection of a special digital tax on Big Tech companies such as Amazon and Facebook.

Highlights

  • The decision to resume the digital tax was taken despite having the threat from USA.
  • France face the threat from USA regarding the retaliatory tariffs on Cheese, French Champagne, handbags and other goods.
  • The tax has brought about 400 million euros to the French budget in the year 2019.
  • But, the government has taken decision to suspend it in the year 2020.

Why France has taken such decision?

France took the decision to resume the digital tax in light of America’s promise to drop the tariff threat pending talks on the international deal of taxing the online companies.

What are the other countries imposing such tax

Similar steps has also been taken by several European countries. The European Countries have imposed similar measures that aims to force the online giants like Amazon and Facebook to pay full taxes in the countries where they do business. They are kept away from availing the benefits from the tax havens.

GAFA Tax

GAFA tax has been named after Google, Apple, Facebook, Amazon. It is a proposed digital tax that will be levied on large technology and internet companies. The decision to introduce this tax was first taken by France.

Background

137 countries had agreed in January 2020 to negotiate a deal on how to tax tech multinationals by 2020-end. It was agreed under the aegis of Organization for Economic Co-operation and Development (OECD). France, Britain, Italy and Spain had  agreed on “a fair digital tax” at the level of the OECD while United States has always pulled out of talks that were aimed at taking decisions for making up a global tax system for digital giants.