Amazon refuses to pay French "Amazon tax"

Amazon will not pay the “Amazon tax” or “Gafa tax” in France, the American e-tailer said in response to the recent ratification of that law. Instead, it will be increasing its selling rates by 3 % in that country, so that the suppliers will in effect pay the tax.

Counterstrike

From 1 October, companies selling their products through Amazon.fr will have to pay 3 % additional costs. This is Amazon’s full-blown counterstrike against the French government: “As a result of the introduction in France of a new tax on digital services, […] we will be forced to adjust our sales rates on Amazon.fr,” stated the company.

Amazon’s action is a direct reaction to the Gafa tax which was passed last month. The tax, named after the four biggest online companies (Google, Apple, Facebook and Amazon) stipulates that any company that generates over 750 million euros of digital revenue with 25 million coming from France, will have to pay a 3 % tax on its French turnover. According to non-profit organisation CCIA (Computer and Communications Industry Association), 27 companies would be affected by the tax. Besides the big four, they include Alibaba, eBay, Microsoft and Zalando.

Tensions

Amazon is the first of the targeted companies to announce any countermeasures. The tax also causes quite a bit of friction between France and the United States: president Trump has already threatened to impose commercial sanctions, more specifically on French wine. He believes the new tax specifically targets American companies.

It remains to be seen how companies in partnerships with Amazon France will respond to the rise of sales rates. They could turn to other platforms or, more likely, simply charge the increased rate to their customers.