France demands millions from US tech giants in new digital-services tax

French tax authorities have contacted a number of major US technology companies demanding they pay millions of euro, as it pushes forward with its new digital tax, and despite criticism from Washington.

Amazon and Facebook are among the companies which have been notified that they are expected to pay the three-percent tax on any revenue generated by large tech companies that operate in France.

France’s Finance Minister Bruno LeMaire has estimated that the new tax could bring in some €500 million ($594 million) in revenue for the government.

The US has criticized the move as unfairly targeting American companies and threatened to retaliate with tariffs on French goods, including cheese and wine, potentially risking a trade war between the two nations.

The tax was initially approved by the French government in July 2019, but the country agreed to suspend collection of the tax in January, in order to allow the Organisation for Economic Co-operation and Development (OECD) to create an international framework for tech companies. 

Tech companies have typically avoided paying taxes in the countries that they operate in, by basing their headquarters in nations with more relaxed taxation laws. The US initially participated in the OECD process, but withdrew from talks in June.

A spokesperson at France’s finance ministry defended the move, telling British media that “France remains committed to finding an international solution so that digital companies pay their fair share of tax just like other companies.”

France is not the first country to introduce or announce plans to introduce a digital services tax. Spain and the United Kingdom have both approved similar legislation to try to compel tech companies to pay a fairer share of tax on the profits generated in those countries.

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