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The OECD, led by a French National, is Rushing a Digital Tax through to avoid a Trade War with the U.S.

1 Cover - GAFA tax companies targeted


Early last summer Patently Apple posted a report titled "The G20 Revealed today that a new International Digital Tax on Tech Companies like Amazon, Google & Apple is in-the-works." France jumped on this issue right after the G20 meeting to announce a new tax aimed at Google, Apple, Facebook and Amazon that was referred to as the GAFA Tax.


Knowing that a new digital tax is now close to being unavoidable, Apple's CEO stated yesterday that the Global Corporate Tax System needed to be overhauled. It's almost a humorous statement coming from the company that was the leader of tax avoidance.


While the Trump administration has been fighting a new digital tax that is primarily focused on U.S. tech companies, Democrats going back to May 2013 were actually way ahead of France and others on this issue of accusing Apple and other large tech companies avoiding tax through various loopholes and schemes.


Back in 2013 our reported noted that "The US Senate investigation, results of which were disclosed Monday, found that Apple employs a group of affiliate companies outside the United States to avoid paying taxes. The subcommittee's chairman, Sen. Carl Levin, D-Mich., and other panel members could hold up Apple as an example of a powerful company using its privileged position to avoid taxes while ordinary Americans must pay them."


Reuters reports today that "Nearly 140 governments have agreed to launch a rewrite of decades-old cross-border tax rules for the digital age over the coming months, the Organization for Economic Cooperation said on Friday after talks this week in Paris."


The rise of Google, Apple, Facebook and Amazon (GAFA) "has strained existing rules to breaking point because big tech companies can book profits in low-tax countries like Ireland no matter where their customers are located.


Tax officials from 137 governments agreed at a meeting in Paris to launch negotiations on new rules for where tax should be paid and what share of profit should be taxed when big digital and other consumer-facing businesses do not have a physical presence in the market, the OECD said."


OECD head of tax policy Pascal Saint-Amans told journalists in Paris that "It’s moving fast because what is at stake is a massive trade war."


France and the United States agreed to a fragile truce last week to set aside a row over France’s digital tax until the end of the year to allow time for the redrafting of international tax rules."


Considering that it's an election year in the U.S., it's a little cloudy as to how this will play out strategically. President Trump seems to want to put the issue into a context that Europe has taken advantage of the U.S. for decades and that a digital tax would certainly trigger a trade war for singling out U.S. companies.


On the flip site, Democratic Presidential candidates that are socialist leaning, such as Elizabeth Warren and Bernie Sanders, have clearly vowed to break up Facebook and Amazon and force Apple to give up their App Store. If either of those Democratic party candidates were to win the 2020 election, then a digital tax is the least of big tech's problems.


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