Difficult imposition of digital sphere: Example of “GAFA Tax” that worries.

GAFA Tax was voted on Tuesday April 9, 2019 as part of the bill for the taxation of digital giants. Retroactive to January 1, 2019 and aimed primarily at digital companies with an annual turnover of 750 million euros (worldwide) and 25 million euros (in France), this tax worries on a large scale.

Go to the GAFA tax understanding through a survey

As soon as this flagship measure for the taxation of digital companies was adopted, Washington, through its local sales representative (Robert Lightizer), opened a so-called “section 301” inquiry to better understand these new provisions of the French legislator. It is occasionally recalled that this section was formerly used by President TRUMP at the end of 2017 to justify tariffs against China. Thus, in the context of the said “section 301”, the US government considered the bill discriminatory and disrespectful of the competition rules.

From discrimination to unequal treatment

Discrimination, as indexed by the US government, would result from the fact that, among the target companies, more than 75% are companies under US law. France, according to the TRUMP government, would therefore unfairly target the US digital leaders such as Google Apple, Facebook, Amazon … to name a few.

Regarding the anti-competitive practice detected in this French law, the aforementioned US local trade representative stated that a retaliatory measure would certainly not delay in view of the importance of US companies targeted unfairly to the detriment of French companies “. Which, obviously, is likely to distort the game of competition. And according to Mr. Lightizer, the retaliatory measures seem to be coming soon. Indeed, as soon as GAFA Tax was passed, Donald Trump announced that French wine, which was heavily consumed by “Uncle Sam, will be taxed ; a measure to fear at the French level for essentially economic reasons.

The defense argument

Two essential points of justification of the GAFA Tax :

  • A non-discriminatory tax,
  • And an economic justification.

According to the French Government, this tax, which is revolutionary in itself, does not discriminate against companies operating digital activities. Not only US companies are affected 26 French companies also fall within the scope of this tax.

Regarding the main objective sought, this tax, according to the government’s forecasts, will bring 400M € to France (in 2019), 450M € (in 2020), 550M € (in 2021) and 650M € (in 2022); figures of great necessity for  the French economy.

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