Highlights

Two American Big Tech Giant such as Amazon and Facebook will start to pay special digital tax to France government. Recently French Government announced that they resumed the collection of a special digital tax.

Points To Note

  • France Government decision to resume the digital tax was taken despite having the threat from the United States of America.
  • France face the threat from United States regarding the retaliatory tariffs on Cheese, French Champagne, handbags and other goods.
  • The digital tax has brought about €400 million euros to the French budget in the year 2019.
  • But, the French government has taken decision to suspend it in the year 2020.

Why the French govt has taken such decision?

French government took the decision to resume the special digital tax in light of America’s promise to drop the tariff threat pending talks on the international deal of taxing the online companies.

What are the other countries imposing digital tax

Earlier, Similar steps has also been taken by several European countries. The European Countries have imposed similar measures that aims to force the online giants like Amazon and Facebook to pay full taxes in the countries where they do business. They are kept away from availing the benefits from the tax havens. The European countries introduced GAFA tax.

What is GAFA Tax?

The GAFA tax includes all American Tech Giant named are Google, Apple, Facebook, Amazon. GAFA tax is a proposed digital tax that will be levied on large technology and internet companies. The decision to introduce this tax was first taken by French government.

Backdrop

In the world, 137 countries had agreed in January 2020 to negotiate a deal on how to tax tech multinationals by 2020-end. It was agreed under the aegis of OECD. The countries France, Britain, Italy and Spain had  agreed on “a fair digital tax” at the level of the OECD while US has always pulled out of talks that were aimed at taking decisions for making up a global tax system for digital giants.

OECD

OECD is Organization for Economic Co-operation and Development. It is an intergovernmental economic organisation with 37 member countries, founded in 1961 to stimulate economic progress and world trade.

The founding member are

Austria, Belgium, Canada, Denmark, France, Germany, Greece, Iceland, Ireland, Italy, Luxembourg, The Netherlands, Norway, Portugal, Spain, Sweden, Switzerland, Turkey, United Kingdom, the United States of America. France Resumes Digital Tax on Facebook France Resumes Digital Tax on Facebook