Trump’s trade war tackles the French tech tax
France wants tech and digital companies to pay their fair share of tax. So politicians there look set to introduce a 3% tax on the revenues of digital companies that are able to use international corporate structures and subsidiaries to pay the least tax possible globally, leaving individual countries out of pocket.
The tech companies will have seen this coming. The low tax yield from successful global tech firms is one of the common reasons given for greater regulation of the tech sector. France is just the first country to institute a solution.
Fair enough. But what should really be little more than a domestic tax issue in France and a bit more work for tech company accountants is now set to become another front in Trump’s trade war.
The Trump administration says it is investigating whether the tax constitutes unfair discrimination against American companies. This could even result in “retaliatory tariffs” against France, the New York Times reports
This is crazy. There are good reasons you could criticise this tax — it taxes revenue rather than profit, and there’s an argument that globalised corporate tax avoidance is better dealt with on an international treaty level rather than on a country-by-country basis. But it’s a stretch to say that it intentionally penalises American companies.
American companies happen to be the most likely to lose out here, but it’s not an anti-American tax. I can’t help but wonder whose Washington DC lobbying dollars are behind this particular move 🤔 Whoever it is played a blinder in conflating an overdue tax adjustment with a trade war.