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EU eyes new strategy to crack down on big tech firms avoiding tax

by | 5 Mar, 2018

The European Union has vowed to counter big tech companies moving profits offshore to tax havens by taxing their revenues instead of their profits.

In a move that may hit Amazon, Apple, Google, Facebook and others, the French Finance Minister Bruno Le Maire said in an interview with Le Journal du Dimanche that the EU would soon unveil plans to tax tech firms revenue at between 2 percent and 6 percent, though it would be closer to 2.

A draft proposal from the European Commission seen by Reuters last month proposed a levy based on where the customer – rather than the company is located. The charge would be based on a percentage of the company’s aggregated gross revenues.

Despite the tougher line, Le Maire said: “Amazon is welcome in France because my top priority is job creation and Amazon represents thousands of jobs.”

It’s likely that the bloc will face stern opposition from these tech companies and Ireland, which has objected to EU tax claims in the past (because of the fact it attracts major companies due to its more lax tax rules), but Le Maire said “The leaders of Gafa (Google, Apple, Facebook, Amazon) themselves understand that the system is not sustainable.”

It’s not only these U.S. giants that are giving the EU a headache. On March 3rd, Donald Trump hit out at the EU on Twitter, bemoaning their “massive tariffs and barriers on U.S. companies doing business there” while calling for a tax on EU cars if they made it difficult for American car firms. It’s not just Trump who is taking a more combative attitude though – his Commerce Secretary Wilbur Ross said In a BBC interview last November: “The EU talks a good job on free trade, but in fact it practises extreme protectionism”. Given this outlook it was only a matter of time before Trump took a fresh swipe at the bloc.

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ALL RIGHTS RESERVED © INVSTR LTD. 2018

Risk Disclosure:
Invstr is a technology platform, not a registered broker-dealer or investment adviser. Invstr does not offer its own recommendations of any security or provide its own research to any user regarding any security transaction or order.
Please note, investing involves risk and investments may lose value. Past performance does not guarantee future results.
Brokerage services are provided by the following:
US-traded securities, including fractional trading, are provided to Invstr users by DriveWealth LLC, a regulated member of FINRA/SIPC. DriveWealth may not establish investment accounts to residents of certain jurisdictions. For more information, including disclaimers, risk and transaction fees click here.
India account traded securities are provided by SIC Stocks & Services PVT Ltd. SIC does not make any personal recommendations to buy, sell or otherwise deal in investments. Investors make their own investment decisions. The services and securities provided by SIC may not be suitable for all customers and, if you have any doubts, you should seek advice from an independent financial adviser. For more information and disclaimers, click here.

 

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