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The US has declared that it is investigating French plans to impose a 3 per cent tax on tech firms' top line, not the bottom.
"The United States is very concerned that the digital services tax which is expected to pass the French Senate tomorrow unfairly targets American companies," said US trade representative Robert Lighthizer.
President - Effects - Legislation - Determine - Restricts
"The President has directed that we investigate the effects of this legislation and determine whether it is discriminatory or unreasonable and burdens or restricts United States commerce," said Bruno Le Maire, the French Minister for the Economy and Finance.
That commerce is data, and lots of it. The EU is getting increasingly annoyed at tax avoidance and France has made the first move. The proposed GAFA [PDF] (Google, Apple, Facebook and Amazon) law would be a revenue, not profit, tax.
Law - Cent - Online - Advertising - Sales
The new law would levy 3 per cent of "targeted online advertising, sales of user data for advertising purposes and online intermediation platforms", and France reckons it can earn €500m a year from the policy. Small businesses are safe – you need to earn €750m, or €25m in France, to be affected.
Over the last decade or so corporations around the world have become very good at avoiding tax, with the tech sector proving particularly adept.
Gig - Headquarters - Country - Ireland - Netherlands
The (perfectly legal) gig is this. You set up headquarters in a low-tax country – looking at you Ireland and the Netherlands – then licence your product out to other EU countries at very high cost so that you barely make a profit.
It's a technique pioneered in Hollywood, where films are taxed on profits. David Prowse, the body of Darth Vader for the original trilogy, opted for a profit payment rather than an upfront deal and so earned very little for Return of the Jedi, which has still to make a profit despite a $32m...
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