A new digital tax passed recently by the French government is being passed on to the French sellers by Amazon. The company largest e-commerce platform in the world is set to increase seller fees by 3 per cent for the thousands of small and medium-sized businesses in the country that make use of the platform.
The aim of the slapping of the 3 per cent digital tax in France is to create a level playing field for the local businesses in comparison to the larger tech businesses, the French government has said.
But according to analysts, this move by Amazon is apparently in direct confrontation of the aim of the French government to create a level playing field between the small and medium-sized enterprises of the country and the Big Tech companies. Analysts also say that this move by Amazon will further complicate the efforts of the French government to put a leash around huge tech companies such as Amazon, Facebook and Google.
“The fact that such companies pay less tax in France than a large bakery or a cheese producer in Quercy creates a real problem,” French Finance Minister Bruno Le Maire said earlier this year.
The latest digital tax imposed by the French government is aimed at those digital companies that have an annual revenue of at least 750 million euros ($832 million) from “digital activities,” and would have at least 25 million euros from such activities from the French market. it is estimated that the new tax would generate about 500 million euros per year and would be applied retroactively from January 1, 2019.
However there has been criticism and backlash for the new French digital tax. The measure is being investigated the administration of the United States president Donald Trump. The US president has also threatened France with retaliatory tariffs because he views the new French tax to “unfairly targets American companies.”
The new taxes would ultimately impact the consumers of France, warned economists and tech firms including Amazon.
The US government is set to hear the version of the tech companies such as Amazon on the new French tax. The French tax was labeled as “harmful” and “discriminatory” by Peter Hiltz, Amazon’s director of international tax policy and planning, in his prepared testimony before the US government. It will “negatively affect the hundreds of thousands of small and medium-size businesses that use Amazon’s services to help reach customers in France,” he said, which would include over 10,000 sellers based in the country.
“This tax is aimed squarely at the marketplace services we provide to businesses, so we had no choice but to pass it down to Selling Partners,” Amazon said in a statement. “We recognize that this may place small firms in France at a competitive disadvantage to their counterparts in other countries.”
Other countries would be encouraged to impose similar taxes on them because of the unilateral approach with the digital tax of France, warned companies like Facebook, Google and Amazon in their prepared testimony to the US government. The companies have instead argued that it would be less harmful to business and consumers if the efforts to address digital taxation issue across the OECD are implemented.
(Adapted from CNBC.com)