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United States Businesses The Almighty Buck

Macron Says France and US Have Reached a Deal To End a Standoff Over a French Tax on Big Internet Companies (reuters.com) 106

France and the United States have reached a deal to end a standoff over a French tax on big internet companies, French President Emmanuel Macron said on Monday. From a report: U.S. President Donald Trump had threatened to hit back with tariff action after France passed a law earlier this year that would impose a 3% tax on revenues earned on digital services in France. Macron told reporters that companies that pay the tax would be able to deduct the amount once a new international deal on how to tax internet companies is found next year.
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Macron Says France and US Have Reached a Deal To End a Standoff Over a French Tax on Big Internet Companies

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  • Trivial (Score:5, Insightful)

    by Geoffrey.landis ( 926948 ) on Monday August 26, 2019 @12:35PM (#59126476) Homepage

    3% is pretty small, compared to the billions of dollars that these companies avoid getting taxed on by the dodge of pretending to be incorporated in tax haven countries.

    • Re:Trivial (Score:5, Insightful)

      by lgw ( 121541 ) on Monday August 26, 2019 @12:55PM (#59126554) Journal

      There are many areas of internet business with less than a 3% margin. Taxing revenue is always stupid and wrong. If you don't want shenanigans with profits, then do a VAT. That's not the most straightforward thing for advertising spending, but I'm sure France already has a system in place for charging VAT for advertising, and this can just be an extension. Obviously for companies like Amazon, a special "American company tariff" VAT on sales is as straightforward as can be.

      • by Cyberax ( 705495 )
        The problem is that the buyer for ads might not be in France (and so not subjected to their VAT) if a multinational company buys ads for a global ad campaign. It's way too easy to game this way.
        • by lgw ( 121541 )

          Sure, but you can still use a VAT-style system for ads shown in France, rather than a revenue-based system. It's not a huge difference between the two for advertising, but it is for other "American internet company" businesses other than advertising.

          • by Cyberax ( 705495 )
            France already charges VAT on ad purchases and it appears that companies are just evading it by establishing an American subsidiary and using it to buy ads.

            but it is for other "American internet company" businesses other than advertising.

            The other target is companies that work as intermediaries (Uber, Amazon, AirBnB). It appears that they are also avoiding taxation by playing tricks with offshoring the transactions.

            • France already charges VAT on ad purchases and it appears that companies are just evading it by establishing an American subsidiary and using it to buy ads.

              If it is happening the way you describe, they could already regulate that.

              I'm guessing though that rather than defend your claim you'd prefer to change the wording.

              The reason it is obvious that the words used don't describe the context; they're not only trying to tax things that French companies did to avoid French taxes, they're trying to tax a much broader group than that.

              It is movable goalposts all the way down.

              • Re:Trivial (Score:5, Informative)

                by Geoffrey.landis ( 926948 ) on Monday August 26, 2019 @01:52PM (#59126830) Homepage

                The reason it is obvious that the words used don't describe the context; they're not only trying to tax things that French companies did to avoid French taxes, they're ....

                No, they're trying to tax things that non French companies did to avoid French taxes, like incorporating in the Cayman Islands [investopedia.com] and assigning all their revenue from France to the mailbox there.

                • by guruevi ( 827432 )

                  So what's to prevent French companies from doing the same? French companies have plenty of tax breaks and workarounds that foreign companies don't have access to. By simply overtaxing local companies, they have become less competitive in a global market, the only way around that is to reduce taxes so you can bring in more companies and collect income tax on their employees.

                  If you're just going to protect your own companies at any cost, you'll reduce investment in your own country. It's why the Trump tariffs

                  • So what's to prevent French companies from doing the same? French companies have plenty of tax breaks and workarounds that foreign companies don't have access to.

                    So do companies in Britain, China, Germany, Italy, Brazil, Canada, Russia, Norway, Poland, Hungary, Thailand, Indonesia, etc, ...., and, would you believe it, in America too! Whoda thunk it?!?! Every country out there gives it's own domestic industry advantages over foreign competitors in every way they possibly can. That's just the way things are.

                  • By simply overtaxing local companies

                    You don't seem to understand what is being taxed here. It's not the companies but rather the end product / service. A local company locally can't get around this. A multi-national corporation can. The switch from being a local and a multi-national is a major barrier reserved for larger and wealthier companies.

                    This isn't a French vs the rest of the world thing. It's a rich not paying taxes while the poor getting stuck with them thing. The answer to this is never to simply remove taxes from the poor, unless y

              • by Cyberax ( 705495 )

                If it is happening the way you describe, they could already regulate that.

                How exactly? France doesn't regulate ads on Youtube.

              • If it is happening the way you describe, they could already regulate that.

                I'm guessing though that rather than defend your claim you'd prefer to change the wording.

                The reason it is obvious that the words used don't describe the context; they're not only trying to tax things that French companies did to avoid French taxes, they're trying to tax a much broader group than that.

                It is movable goalposts all the way down.

                Seems to me they are trying to tax companies that do a large amount of business in France and pay no French taxes.

          • VAT on music streaming will always be $0 because they will say that they get the song for $10 and sell it in France for $10. Taxing revenues is currently the only way for France to get something.

      • by tomhath ( 637240 )
        VAT *is* a tax on revenue. It's structured to make it look like the consumer is paying the tax, but ultimately that's true of all taxes.
        • Re:Trivial (Score:5, Interesting)

          by lgw ( 121541 ) on Monday August 26, 2019 @01:34PM (#59126760) Journal

          For each company involved, VAT is a tax on gross profits. Thus the name. Each company in the supply chain pays according to its value-add. So, if you're manufacturing something with a tiny margin over the cost of the raw materials, you don't get taxed more than your profit. Ideally the government gets their entire desired percentage of the revenue at retail, but the difference between VAT and sales tax is very important as the amount grows.

          • by tomhath ( 637240 )
            The VAT accumulates at each stage of manufacturing to final sale. So unless there's a very costly operating expense/tiny profit it's essentially a tax on revenue.
            • by lgw ( 121541 )

              Yes, but the right company pays each portion of it, and that's all the difference in the world.

              • by tomhath ( 637240 )
                The consumer pays it all in the end.
                • by lgw ( 121541 )

                  In the case of ads, the "consumer" is likely a non-French company, so it's win-win from France. Nothing like taxing citizens of another nation!

          • by kubajz ( 964091 )
            Please slow down and stop modding the parent up. Their argument is simply incorrect - for two reasons.

            First - VAT is not a tax on gross profits. A company that pays VAT must collect VAT from customers and then give the VAT to the government and when it pays VAT to suppliers it collects the VAT that it paid back from the government. This is a key principle of VAT - the company, in effect, collects the tax on value added and gives it to the government, but does not pay this from their own pocket. The tax is

            • by lgw ( 121541 )

              the company, in effect, collects the tax on value added and gives it to the government,

              Fair point: in real-world products, gross profits deduct the cost of manufacturing and shipping, while the company pays VAT on those costs. For digital goods, however, it's about the same.

              when it pays VAT to suppliers it collects the VAT that it paid back from the government

              Right, that's the mechanism for a reason.

              Second - for companies such as Google or Amazon, they have very little "value added" in France, because they pay so many fees to their corporate parent (licensing, use of IP, research contributions, consulting, use of infrastructure) who is conveniently located in a tax haven,

              And this is the reason. If their "costs" are all licensing fees paid to an entity that doesn't pay VAT, then they end up paying the VAT% on all of their revenue, as there's nothing to offset it.

              If their costs are legitimate costs involving goods that are VAT-taxed, then they shoul

        • It is too easy to evade VAT. A general Sales Tax works better. GST is VAT without input credits, which makes it a tax on revenue.
        • by Anonymous Coward

          VAT *is* a tax on revenue

          No, it really isn't. It's easy to spot the difference.

          If your widget comes through me before moving along the chain, and it costs me $1000 to do my part of work but I charge $1001, VAT is NOT calculated against that $1001 in revenue.
          It is calculated on the $1 in gross profits.

          $30 and $0.03 are a pretty big difference.

          If VAT was on revenue I would lose $29 on each widget I work on.
          But it isn't. I gain $0.97 in profit instead of $1.00 on each widget. That isn't a loss, so much as a smaller gain than would

          • by Rhipf ( 525263 )

            Actually the way it works is...

            You buy the widget from your supplier and get charged VAT on the whole amount. Based on your example you would pay $1030 for each unit. You then do what you need to do with the widget and send it along the supply chain. You sell the widget for $1031.30. When it comes time to submit your taxes to the government you state that you need to submit $30.30 in taxes but you also have a credit of $30 from the VAT you paid when purchasing the widget. In the end you only need to submit

      • Re: (Score:2, Redundant)

        by AmiMoJo ( 196126 )

        They are taxing revenue because these companies hide their profits and make them extremely difficult to calculate. Hiding revenue is much harder. If the companies stopped being dicks about it then the French wouldn't need to tax their revenue.

      • by dargaud ( 518470 )

        Taxing revenue is always stupid and wrong

        I don't know what's your basis for saying that, just know that when I work on a contract in France I get taxed 25% for URSAFF, then 10% CET and THEN I get normal personal taxes (more than 10% in my current bracket). I don't see why those companies should be able to compete for free. Please explain.

      • by Tom ( 822 )

        There are many areas of internet business with less than a 3% margin

        Which is why profit margin is added after taxes. Basically: Sales price = buy price + overhead + taxes + profit margin.

        That is literally economics 101. I learnt that in the first half of the first semester.

        Of course, if you didn't include taxes in your price calculation so far, assuming you can just dodge them, then now you will have to raise your price or swallow the difference. Just like the people who competed fairly and didn't dodge the taxes. If that means the loss of your competitive advantage, than o

    • Re: (Score:1, Flamebait)

      by chrylis ( 262281 )

      This is a 3% tax on revenue, not income. It's obscene.

    • 3% is pretty small, compared to the billions of dollars that these companies avoid getting taxed on by the dodge of pretending to be incorporated in tax haven countries.

      Macron will declare that Trump backed off and gave in.

      Trump will declare that Macron backed off and gave in.

      So every politician wins here!

      Oops . . . the ordinary common folks . . . ?

      Well I guess they lost.

    • France and Europe is in trouble, their economies are weak and their answer is more tax (and negative interest rates, how is that going to work.)
    • by Luckyo ( 1726890 )

      My understanding is that this is 3% tax on revenue, which is actually a pretty big tax. Not to be confused with 3% tax on profits, which is indeed pretty small.

    • I am french, take it from me, french taxes start low, then they slightly raise year after year to the point we were recently the most taxed country in the world. Don't underestimate the slyliness of french bureaucrats.
    • Those companies are just following the rules. France is talking about unilaterally changing them.
  • way to go to bat for the tax sheltered billionaires.
    • Well, how would it look if that nice American tax cut the billionaires got in the US a little while ago then got gobbled up by this New French tax?

  • There is been no politician less popular in France than Macron is right now. This is former investment banker and oligarch who somehow became a minister of finance under the former "socialist" government. This guy has 0 chance of being reelected.

    • There is been no politician less popular in France than Macron is right now.

      Sounds like Trump has found his soulmate.

      • Sounds like Trump has found his soulmate.

        Trump is much more popular in his country than Macron is in its own.

        • Trump is much more popular in his country than Macron is in its own.

          I'm not sure that's physically possible in this space-time continuum.

        • by N1AK ( 864906 )
          Trumps ~42% approval rating and Macron ~34% clearly a difference but "much more popular" seems to be stretching the definitions of popular and much well beyond breaking point.
    • by Quantum gravity ( 2576857 ) on Monday August 26, 2019 @01:37PM (#59126780)
      His party (En Marche) is still the top party in France for the coming 2022 presidential elections by a small margin, as of May 28 2019. The closest competitor is National Rally with Marine Le Pen, an extreme right-wing anti-immigration populist.
    • by lorinc ( 2470890 )

      He's a 34% positive opinions (poll from 2 days ago), which is much better than his predecessor Hollande at the same time (17%) but worst than the one before - Sarkozy - at 45% (but Sarkozy was also at 35% after 18 month). After 2 years of his second term, Chirac (the president before Sarkozy) was also at 35%.

      Remark that both previous president were not re-elected. Sarkozy lost to Hollande and Holland did not even try.

      All in all, nothing abnormal considering what happened in the past 15 years.

  • They've reached a deal that will last until Trump burps or someone says "That's not a good deal!" and then he'll blow it up and fuck it over like every other thing he's done.

    He's not a "win-win" guy, he's a "win-lose" guy and if he doesn't think he's 'winning' then he'll scream and pout and refuse to honor the deal. Kind of like the way he ran his three casinos into the ground.

    • No, this is Macron announcing the deal, because it was his blunder. The "deal" is that France promises to give back any money they actually collect with this policy. That way, the local nationalists won't be able to complain that he gave in, but he was able to give in because the whole plan was stupid and France doesn't have the clout (eg, user base) to pull it off. France needs this to be a fake deal, because it was a fake policy.

      • No, this is Macron announcing the deal, because it was his blunder. The "deal" is that France promises to give back any money they actually collect with this policy. That way, the local nationalists won't be able to complain that he gave in, but he was able to give in because the whole plan was stupid and France doesn't have the clout (eg, user base) to pull it off. France needs this to be a fake deal, because it was a fake policy.

        No, the deal is that if the OECD can come to a joint agreement on taxation, and if that tax is lower, the excess tax will be repaid.

        • No, this is Macron announcing the deal, because it was his blunder. The "deal" is that France promises to give back any money they actually collect with this policy. That way, the local nationalists won't be able to complain that he gave in, but he was able to give in because the whole plan was stupid and France doesn't have the clout (eg, user base) to pull it off. France needs this to be a fake deal, because it was a fake policy.

          No, the deal is that if the OECD can come to a joint agreement on taxation, and if that tax is lower, the excess tax will be repaid.

          Quite smart of France really. The chances of a deal being reached quickly are slim with so many vested interests involved. My bet is any enforced changes will be years away still.

  • by mnemotronic ( 586021 ) <mnemotronic&gmail,com> on Monday August 26, 2019 @05:37PM (#59127540) Homepage Journal
    France imposes a 3% tax on American companies.
    Trump takes hard-line and threatens France with tariffs on French goods if they even think about proceeding with the tax.
    France & Trump work out a deal which involves France proceeding with the tax. Trump declares victory.
    Woo-Hoo! America wins again.
    • by AHuxley ( 892839 )
      Depends on what France had to do to get its new tech tax on US brands.
      Wait and see how that "new international deal" global effort works out :)
      A French per email tax, per social media account tax, per GB of IPS data tax?
      The more France and EU place taxes on US innovation, the more they fail.
      The better the US freedoms look to French users seeking accounts/publishing/support/value.
      France is free to tax tech and innovation all it wonts.
      Tech is free to move around France.
      French users will just have to g
  • Yeah Macaroon, I'm going to have to wait for the US to confirm. Sounds to me like France would indeed want to keep exporting wine and cheese to the biggest importer of French cheese and wine. Cheese is hard to make with our sanitary regulations (raw milk is not allowed), but wine we make perfectly adequately on our own.

    • Yeah Macaroon, I'm going to have to wait for the US to confirm. Sounds to me like France would indeed want to keep exporting wine and cheese to the biggest importer of French cheese and wine. Cheese is hard to make with our sanitary regulations (raw milk is not allowed), but wine we make perfectly adequately on our own.

      This from a munchkin from the land of chlorinated chicken. Have you ever wondered why the US chlorinates chicken to (unsuccessfully) remove harmful bacteria like E-Coli and Salmonella and the EU bans chlorination? It's because the US allows deplorable hygiene condition in it's food industry to boost corporate profits while the EU decided that the problem of E-Coli and Salmonella in your food is best solved by means of strict and proper hygiene in production facilities.

    • by Nadir ( 805 )
      And 99% of the production of US wine is based on the same old "international" wine grape variety. Yawn.
  • I like that there will be work towards an international agreement on how to tax internet companies (though it should be all international businesses), as there seems to be some disagreement and upset involved. I am not so confident that there will be an agreement worked out by next year. I am not so confident that one is possible, given that there is no body to which any sovereign nation is likely to surrender its authority to collect taxes. Which is pretty much what would be needed.

"It might help if we ran the MBA's out of Washington." -- Admiral Grace Hopper

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