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Zuckerberg in France: Facebook chief to face pressure on taxes from Macron

Fresh from saying "sorry" to European lawmakers, Facebook CEO Mark Zuckerberg holds talks with Emmanuel Macron on Wednesday where he will face renewed pressure over his company's tax policies.

Zuckerberg in France: Facebook chief to face pressure on taxes from Macron
Photo: AFP

Zuckerberg apologised to the European Parliament on Tuesday for the “harm” caused by a huge breach of users' data and by a failure to crack down on fake news.

And in a sign of the increasingly hostile environment for the social media giant in Europe, he is likely to face another grilling in France which has led efforts in the EU to force US tech giants to pay more tax.

Facebook, along with Google, Apple and Amazon, are in the sights of Macron and other EU leaders over their use of low-tax countries such as Ireland to reduce their corporate tax rate to nominal levels.

Macron “is looking to start a dialogue” with tech bosses “to have discussions that will sometimes be frank and direct, to talk about regulation and international governance,” an aide said.

Zuckerberg has been invited along with around 60 other tech bosses including Microsoft's Satya Nadella, Uber's Dara Khosrowshahi, IBM's Ginni 
Rometty, SAP's Bill McDermott and Jimmy Wales from Wikimedia.

As well as talking tax regulation and the battle against fake news, which Macron has also vowed to tackle, the 40-year-old French president will be keen to stress his pro-business credentials at the “Tech for Good” summit.

The former investment banker is desperate to attract more foreign investment to France and has vowed to turn the country into a “start-up 
nation.” 

During a brief break from politics in 2014, he travelled to California on a research trip ahead of the launch of his own start-up, which he had planned in 
the online learning sector.

He abandoned the idea when given an opportunity to enter the then-Socialist government, but since taking power as president last May he has consistently 
championed the sector — while insisting multinationals must pay tax.

Many of the companies attending are expected to make announcements to underline their commitment to corporate social responsibility, with some 
initiatives focused on Africa, French presidential aides say.

After their talks at the Elysee Palace on Wednesday, the tech bosses are set to attend workshops to discuss the future of work in the afternoon and the 
meeting will be concluded by Prime Minister Edouard Philippe.

Many of them will attend a separate event called VivaTech in Paris on Thursday.

'I'm sorry'

Speaking in Brussels in front of European lawmakers on Tuesday, Zuckerberg faced often hostile questions, with Liberal leader Guy Verhofstadt asking if 
he wanted to be remembered as a “genius who created a digital monster”.

Zuckerberg said that while Facebook has brought in new features to connect people, it had become clear in the last two years that they “haven't done 
enough to prevent these tools from being used for harm”.

“And that goes for fake news, foreign interference in elections or developers misusing people's information. We didn't take a broad enough view 
of our responsibility,” he said in his opening statement.

“That was a mistake, and I'm sorry for it.”

His livestreamed testimony in Brussels was the latest stop on a tour of apology for a major data breach that saw him quizzed for ten hours in the US 
Congress in April, and will take him to Paris on Wednesday.

Despite Macron's efforts to push his European partners into creating a new tax system for multinational tech companies, talks have stalled due to 
resistance from EU members such as Ireland.

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Facebook agrees with France to pay €106 million in back taxes

US social media giant Facebook on Monday said it had agreed with the French government to pay €106 million in back taxes for its French operations over a 10-year period from 2009, and to pay 50 percent more tax in the current year.

Facebook agrees with France to pay €106 million in back taxes
Many of the US digital giants have their EU headquarters in low-tax-regime countries. Photo: AFP

“We take our tax obligations seriously, pay the taxes we owe in all the markets in which we operate and work closely with tax administrations around the world to ensure compliance with all applicable tax laws and resolve any disputes,” a Facebook France spokesperson said in a statement.

The statement said that since 2018, Facebook changed its sales structure so that “income from advertisers supported by our teams in France is registered in this country”.

“This year we are paying €8.46 million in income tax, an increase of almost 50 percent compared to last year,” it said. 

“We have also entered into an agreement with the tax authorities covering the years 2009-2018, under which we will make a payment of €106 million.”

The payment by American digital giants of tax on revenues in the country in which they are accrued has been the subject of a longstanding conflict between France and the United States. 

Big EU countries say the so-called GAFA – Google, Apple, Facebook and Amazon – are unfairly exploiting tax rules that let them declare profits in low-tax havens, depriving governments of a fair share of their fiscal payments.

Many of the US digital giants have their EU headquarters in low-tax-regime countries. 

The dispute between France and the United States on the digital giants' tax has escalated to the extent that the United States in July unveiled heavy import duties on France.

The office of US Trade Representative Robert Lighthizer found France's digital services tax was discriminatory and “unfairly targets US digital technology companies,” and said it would impose punitive duties of 25 percent on $1.3 billion worth of French products.

But it will hold off on collecting the fees to allow time for the dispute to be resolved.

READ ALSO: Trump's US wine tariffs 'threaten 100,000 jobs in French countryside'

 

In the meantime, France, Britain, Spain, Italy and others have imposed taxes on the largest digital companies.

US officials have slammed these moves as discriminating against American firms, and say any new levies should come only as part of a broader overhaul of international tax rules.

In January, 137 countries agreed to negotiate a deal on how to tax tech multinationals by the end of 2020, under the auspices of the Paris-based Organisation for Economic Co-operation and Development.

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