Gafa denounce French digital tax "discriminatory"

Representatives of Amazon, Facebook, Google and other Internet leaders rose collectively Monday, Aug. 19, at hearings in Washington, against the French taxation of digital groups, denouncing retroactivity, discrimination and double taxation.

"Troubling precedent", "discriminatory tax", "brutal rupture of long-established rules": leaders of large groups known as "Gafa" gave voice in an investigation opened by the US Trade Representative ( USTR).

This investigation was launched after the French decision to impose these digital giants, for possible reprisals. President Donald Trump has threatened to tax imports of French wine.

>> To read: Donald Trump attacks Emmanuel Macron and threatens to tax French wine

The French law, promulgated July 11, creates a turnover tax made by these major Internet companies in the Hexagon, while they are mostly based in the United States, where they are imposed on their profit.

"This is an imperfect solution to a lapsed tax system," said Jennifer McCloskey of the Information Technology Industry Council.

There is a consensus on the part of the authorities and industry to recognize the need for reform of the tax system for these digital transactions, but rather under the auspices of the OECD, which brings together the industrialized countries.

"A radical break from the usual practice"

"This is a radical break from the usual practice," protested Rufus Yerxa, chairman of the National Council of Foreign Trade.

For Gary Sprague, Baker and McKenzie law firm representing various groups ranging from Airbnb to Expedia, via Microsoft and Twitter, the tax decided by Paris is "discriminatory".

Around thirty groups with at least 25 million euros in sales in France and 750 million euros worldwide will have to pay this tax. These are primarily American and global leaders of the sector.

>> Read: Washington opens an investigation into the "Gafa tax" project in France

French taxation considers three levels of activity, noted those responsible: advertising, exchanges or impressions on the platform and transactional data.

According to Gary Sprague, other traditional media groups, which reach the French public through advertising, should also be subject to this tax, "like newspapers, television channels". Similarly, Google's representative, Nicholas Bramble, believes that "taxing a handful of big groups on the Internet does not make sense when all sectors become digital."

"We have never seen a retroactive tax"

Amazon, whose France is the second largest European market for electronic commerce, denounces the "double taxation". Peter Hiltz, director of tax planning for the online retail giant, cites the typical case, according to him, of the American traveler in France who surfs and buys on the Amazon US site. "His transaction will be taxed in France, but also in the United States at the profit level," he argues.

The group also wonders how to distinguish Swiss or French speaking visitors to the Amazon site in French. In any case, it ensures that the new taxation will "have a negative impact on Amazon and thousands of small and medium-sized businesses" working with the distributor.

Some 58% of Amazon's sales go through partners, on which the group has already warned that it would bear the cost of new taxes. "They have already been informed that their registration fees will increase by 1 October," said Peter Hiltz.

The retroactivity of the law adopted by Paris, which will apply this new tax since the beginning of the year 2019, also raises protests. "We have never seen a retroactive tax," protests Alan Lee, Facebook, who complains like other representatives of a lack of "guidelines" to enforce the law.

None of the leaders of these large groups could say at this stage what volume of their turnover would be imposed. All explained that they had to change the way they collect the data, traffic and impressions left by visitors on their sites.

A process and a new accounting that will "cost millions of dollars," said Jennifer McCloskey, Information Technology Council, without being able to give a more precise assessment.

With AFP