Amazon will pass on digital tax to French businesses using its service

US online retailer Amazon is planning to make French businesses using its platform pay France's new digital tax instead of taking the hit itself, the company announced on Thursday.

The GAFA tax (an acronym for Google, Apple, Facebook, and Amazon) put France at the forefront of countries seeking to force big tech companies to pay more taxes in the markets they operate, which has not gone without threats of retaliation from the US.

As it stands, tech giants pay little or no corporate tax in countries where they do not have a large physical presence. They declare most of their profits where they are headquartered.

The 3% levy is due to kick in retroactively from the start of 2019. It will tax profits from online sales for third-party retailers, digital advertising, and the sale of private data.

France economy's ministry said around 30 large companies would have to pay the tax, especially those with global revenues of at least €750 million and revenue of at least €25 million in France alone.

“As we operate in the very competitive and low-margin retailing sector, and invest massively in creating new tools and services for our clients and vendor partners, we cannot withstand an additional tax,” the company told AFP in a statement.

“This could put smaller French firms at a competitive disadvantage to their peers in other countries, and like many others, we have alerted the authorities,” it said.

But in a statement to Euronews, France's economy ministry said the tax was “was above all a question of fiscal justice”.

“Amazon has chosen to pass on the costs of this tax to the small and medium-sized enterprises that use its services. There is nothing obliging them to do so,” the ministry said.