Why target tech giants?
At present, they are able to pay little or no corporate tax in countries where they do not have a large physical presence. They declare most of their profits where they are headquartered. The European Commission estimates that on average traditional businesses face a 23% tax rate on their profits within the EU, while internet companies typically pay 8% or 9%. France has long argued that taxes should be based on digital, not just physical presence. It announced its own tax on big technology firms last year after EU-wide efforts stalled. An EU levy would require consensus among members, but Ireland, the Czech Republic, Sweden and Finland raised objections. France's new 3% tax will be based on sales made in the country, rather than on profits. French Finance Minister Bruno Le Maire criticised US threats of retaliation Defending the new tax on Thursday, Mr Le Maire had said France was "sovereign and decided its own tax rules". "I want to tell our American friends that this should be an incentive for them to accelerate even more our work to find an agreement on the international taxation of digital services," he said. About 30 companies will pay it - mostly US groups such as Alphabet, Apple, Facebook, Amazon and Microsoft. Chinese, German, Spanish and British firms are also affected, as well as the French online advertising firm Criteo. The French government says the tax will end if a similar measure is agreed internationally. The big tech companies have argued they are complying with national and international tax laws. Prior to Mr Trump's tweet on Friday, US Trade Representative Robert Lighthizer had announced an investigation into the French tax, arguing that France was "unfairly targeting the tax at certain US-based technology companies".DISCLAIMER: The Views, Comments, Opinions, Contributions and Statements made by Readers and Contributors on this platform do not necessarily represent the views or policy of Multimedia Group Limited.
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