France issues digital service tax notices to big tech

In a statement, France’s Finance Ministry said, it has sent out notices to big tech companies to pay digital service tax as planned earlier.

Earlier France had suspended collection of the digital service tax, since negotiations were underway at the Organisation for Economic Cooperation and Development (OECD) on an overhaul of international tax rules.

The move is certainly not surprising since for some time now, the finance ministry has said it would collect the tax in December as planned if the negotiations proved unfruitful by then. This is exactly what has happened following the overhauling of international tax rules among nearly 140 countries, with the talks expected to last until mid 2021.

“Companies subject to the tax have received their notice to pay the 2020 instalment,” said am official from the ministry.

In 2019, France had applied a 3% levy as digital service tax earned in France by companies with domestic revenues in excess of 25 million euros and 750 million euros worldwide.

In a statement, Facebook said, it’s stance “is to ensure compliance with all tax laws in the jurisdictions where we operate”, while adding, it had received its tax bill from the French authorities.

Amazon.com has also received a reminder from the French authorities to pay digital service tax and will comply, said a source familiar with the matter at Amazon.com

France said, it will revise the tax once an OECD deal is agreed upon and once cross-border taxation for online commerce becomes normalized globally.

Negotiations stalled with the Trump administration reluctant to sign a multilateral agreement, said officials.

“We will levy this digital taxation mid December as we always explained to the U.S. administration,” said French Finance Minister Bruno Le Maire. “Our goal remains to have an OECD agreement by the first months of 2021”.

According to Dan Neidle, a partner at law firm Clifford Chance, it is to be seen whether U.S. President-elect Joe Biden will agree to such a deal.

“I’m not sure why Biden would agree to something which enables U.S. corporations to pay more tax in Europe and has not many benefits to the U.S.,” said Neidle.

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