The French Ministry of Finance said on Wednesday that the French Ministry of Finance has issued a notice to large technology companies informing them that the digital service tax should be paid in December as planned.
France suspended tax collection early this year, which will hit companies like Facebook and Amazon. At the same time, the Organization for Economic Cooperation and Development (OECD) is currently negotiating a comprehensive reform of international tax rules.
The Ministry of Finance has long stated that if negotiations still fail to produce results by then, it will collect taxes as planned in December, which happened when nearly 140 countries agreed last month to continue negotiations until mid-2021.
An official of the ministry said: “The companies that are to pay taxes have received notices asking them to pay instalments for 2020.”
Last year, France levied a 3% tax on the digital service revenues of companies with French revenues of more than 25 million euros (about 2 billion rupees) and 750 million euros (about 66 billion rupees) in France.
It said that Facebook’s position “is to ensure compliance with all tax laws in the jurisdictions in which we operate”, adding that it has received tax bills from the French authorities.
A person familiar with the online retailer said that Amazon has received reminders from the French authorities to pay taxes and will comply with the tax law.
Paris stated that it will revoke taxes immediately after reaching the OECD agreement to update cross-border tax rules in the era of online commerce. Large Internet companies can book profits in low-tax countries regardless of where their customers are.
Officials said that as the Trump administration became unwilling to sign a multilateral agreement, the negotiations were deadlocked.
French Finance Minister Bruno Le Maire said in an interview with Bloomberg on Monday: “We will, as always, explain to the US government that we will collect this digital tax in mid-December.”
He said: “Our goal remains to reach an OECD agreement by the first few months of 2021.”
Dan Shu Neidle, a partner at the law firm Clifford Chance, is skeptical that the American president-elect Biden would agree to such a deal.
Nedell said: “I’m not sure why Biden agreed to make U.S. companies pay more taxes in Europe, but there is not much benefit to the United States.”
© Thomson Reuters 2020
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