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The Debate

France takes on Silicon Valley: Washington threatens tariffs over GAFA tax

It was one of the big demands of Yellow Vest protesters: tax the new giants of e-commerce that are killing small businesses. But on the day that France's parliament voted a so-called GAFA tax of three percent on revenue earned on French soil for big tech companies that hang their fiscal hat abroad, the Trump administration is paving the way for retaliatory tariffs. A legitimate gripe? Or another case of Washington weaponising trade?

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It's not just Trump: the consensus goes beyond party lines in the United States to defend the interests of a Silicon Valley that to a large degree seems to own the internet. What is fair taxation in the era of globalisation? The OECD and G20 nations are working on it and France has said it will scrap the new tax once fresh rules are in place globally.

But then again, will there even be a consensus? Just look at Europe. While the likes of the UK, Spain and Austria are also preparing GAFA taxes, smaller EU members like Ireland who act as quasi corporate tax havens are resisting any threats to their model. How to break this crucial deadlock?

Produced by Alessandro XENOS, Juliette LAURAIN and Ingri BERGO

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