US tech giants are set to testify at a US government hearing over the French digital tax imposed last month in an attempt to level the playing field between big companies and local businesses.
“[The French tax] represents a troubling precedent, unnecessarily departs from progress toward stable long-lasting international tax policies and may disproportionately impact US-headquartered companies,” Jennifer McCloskey, vice president for policy at the Information Technology Industry Council representing Amazon, Facebook, Apple Inc, Google and other digital firms, stated in her prepared testimony ahead of the US government hearing on Monday.
Alan Lee, Facebook global tax policy head, said the tax is likely to “hinder growth and innovation in the digital economy,” while Google trade policy counsel Nicholas Bramble blasted the French tax as it “uniquely targets a subset of businesses” and is “likely to generate disputes on whether specific digital activities were ‘supplied in France’ or in another region.”
In his testimony, Amazon’s director of international tax policy and planning said that the firm had no choice but to pass the cost down to selling partners, because the French tax “is aimed squarely at the marketplace services we provide to businesses.”
As an alternative to the French tax, the US digital firms propose to address the issue of digital taxation through the Organization for Economic Co-operation and Development, or OECD, which could come up with measures less harmful to both business and consumers.
The French move was not welcomed within America, with the US Trade Representative’s Office opening a probe into the tax, which it called “unreasonable.” The US government also warned of retaliatory measures and is now considering imposing new tariffs on French goods, with US President Donald Trump even considering French wine as a target for possible new levies. France, however, has been ardently defending its new tax, with Le Maire emphasizing that his country is “sovereign and decides its own tax rules.”