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Macron Embraces Leadership Role in Digital Taxation

Posted on Aug. 23, 2019

Allowing tech giants to avoid taxation where they make money is a “crazy” system that provides for a “constant tax haven,” French President Emmanuel Macron said.

“The big digital players are not contributing to the common good," Macron told reporters August 21. "I don't agree with this system, I don't think it's a good one, including for American workers,” he said. “When you have a digital player who is in the hotel industry and who doesn't pay VAT or any tax and who comes to compete with a hotelier who pays corporation tax, VAT, and various local taxes, it's not fair and it's not sustainable.” 

Speaking in advance of the August 24-25 G-7 meeting in Biarritz, Macron publicly accepted his role as a leader in digital taxes. "That’s what President Trump told me last night: 'They all say it’s you,'" Macron recalled. "OK, well I own it."

Macron signed France's temporary DST into law July 24. The G-7 meeting will give him an opportunity to rally further support for a speedy transition to an international digital taxation system. The United Kingdom, Spain, Austria, and Italy are also considering implementing temporary digital taxes until the OECD completes its work to reach consensus on a global agreement to tax the digital economy.

Macron noted that U.S. Treasury Secretary Steven Mnuchin has expressed willingness to find common ground with France on an international digital tax plan. However, the Office of the U.S. Trade Representative is proceeding with a section 301 investigation as American companies complain that the French tax is discriminatory.

President Trump has suggested that the United States could retaliate against France's 3 percent DST, which affects primarily American digital companies, with a 100 percent tariff on French wines.

The French government moved to become the first EU country to establish a digital tax after efforts failed at the EU level. The tax applies retroactively from January 1 to companies with €750 million in global digital sales and more than €25 million in sales in France. The 3 percent tax applies to turnover from online advertising, the sale of data for advertising purposes, and fees derived from linking users to online sales platforms. Legal challenges are expected in France on grounds that the law is not consistent with EU treaties that forbid providing preferential state aid to national companies.

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