Alphabet Google unit, Facebook and Amazon are just three of the big names that will testify on Monday at a hearing in the U.S. on the newly-introduced French government’s digital services tax.
The 3% tax, which was approved by the French Senate at the beginning of last month, will apply to American tech companies that have over 25 million euros in French revenues and 750 million euros ($838 million) worldwide, targeting the revenue these companies make in France.
The U.S. Trade Representative’s Office called the levy “unreasonable” and President Donald Trump threatened to impose tariffs on French products in retaliation.
In written testimony for the office, Amazon’s international tax policy director Peter Hiltz said that over 10,000 French-based small- and medium-size businesses are selling on Amazon’s online stores. Hiltz added that the company had informed these businesses that beginning from October 1, some fees will increase by 3% for sales on Amazon.
“U.S. products and services sold through Amazon’s online store in France will cost more as a result” of the tax, he noted, according to CNBC.
Facebook global tax policy head Alan Lee stressed in a testimony of his own that the French digital tax “poses difficulties for Facebook’s business model and will hinder growth and innovation in the digital economy,” which in turn would lead to the need for re-engineering Facebook’s systems.
He explained that while the company possessed the necessary data “to calculate the tax,” more time and resources will be necessary to “capture this data and maintain it for these new tax and audit purposes.”
Google trade policy counsel Nicholas Bramble also criticized the tax in the company’s written testimony, saying that it “targets a subset of businesses.”
Jennifer McCloskey, vice president for policy at Information Technology Industry Council, which represents the three tech giants, will say at Monday’s hearing that the tax “represents a troubling precedent, unnecessarily departs from progress toward stable long-lasting international tax policies and may disproportionately impact U.S.-headquartered companies.”
Meanwhile, other European countries have laid out plans to introduce a similar digital tax, arguing that it is necessary as big, multinational internet companies book profits in low-tax countries like Ireland, no matter where the revenue originates, the outlet informs.