French government levied the GAFA (Google, Apple, Facebook and Amazon) tax after failing to secure an EU accord plugging a ‘fiscal loophole’.
Amazon plans to pass on the costs of France’s new digital tax on internet giants to the businesses that use its Marketplace platform, instead of taking the hit itself, the US online retailer has announced.
The levy, approved last month, put France at the vanguard of countries seeking to force big technology firms to pay more in the markets where they operate – but has garnered threats of retaliation from US officials.
Applied retroactively from 1st January, it sets a 3% levy on the profits from providing online sales for third-party retailers, as well as on digital advertising and the sale of private data.
“As we operate in the very competitive and low-margin retailing sector, and invest massively in creating new tools and services for our clients and vendor partners, we cannot withstand an additional tax,” the company said in a statement. “This could put smaller French firms at a competitive disadvantage to their peers in other countries, and like many others, we have alerted the authorities.”
French President Emmanuel Macron’s government went ahead with the so-called GAFA tax (an acronym for Google, Apple, Facebook and Amazon) after failing to secure an EU accord on how to plug what it considers a fiscal loophole. American internet heavyweights often route their EU profits to member states with low corporate taxes such as Ireland or Luxembourg, allowing them to pay next to nothing in countries where they make huge profits.
According to the French economy ministry, around 30 large companies would be required to pay the tax, notably those with global revenues of at least 750m euros ($831m) and revenues of at least 25m euros in France alone.
The French government said it had no choice but to take action, though it is hoping to secure an international agreement that would include all OECD countries by the end of 2020.