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Tech tax: Vive La France!

15th Jul 2019
Partner An unnamed firm
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France country flag background formed from digital mosaic tiles

Our anonymous partner stands in solidarity with our continental cousins over new tech turnover tax rules brought in by the French authorities.

As it happens, I have penned this article on and around Bastille Day, le 14 Juillet, but that celebration is not the reason for my admiring tribute to the plucky French.

While George Osborne and then Philip Hammond wittered on about imposing a tax on ethereal global megaliths that drive coaches and horses through legislation, the French government has actually taken some positive action.

The tax authorities across the channel have imposed a 3% tax on turnover generated by the largest tech companies in France.

Just to add to the fun, the legislation has been backdated to 1 January 2019, which will inevitably lead to accusations of dirty dealing.

I wonder whether anybody now really believes that tax avoidance by multinational companies that takes advantage of antiquated legislation is fair to the rest of society, let alone to you and me as taxpayers?

Can anybody really object to a modest local tax charge by authorities that, like our own, are losing out massively on tax revenues which are probably much-needed to support the local economy?

The answer is apparently a resounding “yes”. The President of the United States has determined that this charge is an attack on his nation.

The fact that the tax is applied across the board to companies from around the world, including one based in France, does not seem to influence the man whose brain is geared to nothing but “America First”.

I burst out in a cold sweat on hearing that this highly esteemed global leader is going to initiate yet another trade war against an ally. The irony should not be lost on any reader, in that the only reason why the French have had to impose the charge is that the companies under attack have been selling goods and services far more cheaply than local competition, which they are trying to drive out of the market.

Many readers might agree with my analysis that it would have been far better for this measure to have been imposed by all 28 countries (I mean 28) in the European Union. However, one or two have vested interests and would not subscribe to any policy that might harm them, however good it might be for their fellow unionists.

We could go it alone and impose our own 3% or even 5% tax on these companies and maybe even extend it a great deal further. This would bring in much-needed revenue to the Exchequer in what could be tough times ahead.

Don’t get too excited. Even though this is perfectly logical and my understanding from all of the hype is that one of the biggest reasons for leaving Europe is to pursue positive trade deals with our allies there is a problem.

Number one on that list comes “our closest ally” the USA. However, is there really any hope of achieving a positive result in a tax or trade battle with the global school bully?

None at all. If the man who is hotly tipped to be our next leader is unwilling to support the British ambassador to the United States when he is thrown under a bus, the chance of his standing up to a man who would just keep repeating that mantra “America First” on an even more serious issue is surely zero.

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