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Tiff over French tech tax may climax at G7

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Donald Trump Trade War

Paris, Aug 24 Hours before the United States President Donald Trump landed in Biarritz, the buzz was that the weekend would see the outbreak of a new trade war unleashed by Trump. This time with France and indeed the entire European Union.

Trump has already criticised roundly and sharply the tax that the French government introduced in July, but put into effect retrospectively from January 1 on tech companies.

The tax covers sales within France generated by companies that are headquartered elsewhere. The tax of three per cent on total sales will be imposed on companies with a minimum global turnover of 750 million euros that generate at least 25 million euro sales in France this year.

For now, the tax concerns a total of 28 companies, many of them tech giants from the United States, such as Alphabet, Facebook, Uber and Amazon, but there are also Chinese and some European companies, including a French one as well.

Before leaving for Biarritz, Trump threatened to impose additional levies on French wines imported into the US as a counter measure against the French tech tax. The news is worrying for the French as the US is the largest market in the world for French and indeed European wine makers. It accounted for 32 percent of the Euro 11.3 bn that the European vineyards earned in exports last year.

Thus any riposte by Trump would impact the entire EU. However, the EU leaders have come to back Macron strongly and said that they were ready for a bruising battle with the US on the tech tax, an issue that has been an irritant in the EU-US affairs for the past several years.

France denies that the tax unfairly targets US businesses and is protectionist. It says that time has come for the international community to modify the tax regimes to take into account the evolution of the global economy and the emergence of technology companies that do not need a physical presence and yet conduct business all around the globe.

Indeed, the European Union has long accused the new tech companies, most of them based in the Silicon Valley, of tax evasion across the EU, even though they raise a significant proportion of their global sales on the continent.

Led by France and Germany, last year the EU had indeed begun pushing for new norms of EU-wide taxes to net these companies as well. However, the measure stalled as some of the EU members, themselves low-tax or no-tax havens, felt their own interests threatened by the move and opposed the tax.

Nevertheless, the French argument does carry weight. The technology companies have benefitted for long, one could argue, for too long and too much, riding on the back of nearly no taxes in several key markets. They have also by-passed key regulations that add to the costs of doing business, such as taxi licences that Uber or its drivers dont need to buy. A study by the European Commission says that on an average the tech firms pay as little as 8 per cent of tax on their total sales within the EU, while the standard bricks and mortar companies pay nearly 23-25 per cent.

This lopsided tax rate and playing with the regulations of the countries perhaps could have been justified about two decades ago when these tech firms were yet nascent. But today, they account for a sizeable chunk of the global economy, have turned their founders in multi-billionaires and their shareholders have also made a killing on their investments.

The only ones that have not reaped any financial benefits from this wealth are perhaps the governments and more broadly the society. This may indeed be the time for a review of the global taxation system and the special treatment meted out to the techies.

In many ways, the French tax could be viewed as another attempt by the government in Paris to push for a global discussion on this key issue. France has said that it will withdraw its tax the moment an EU-wide measure takes place or another global tax that would be seen as fair both the technology and innovation as well as the ‘old economy’ or traditional businesses.

Getting into a very high profile and public spat over taxing hi-tech at a time when France is trying to position itself as the innovation capital of EU, if not the world, is a very risky strategy. Yet, the French government believes that the two are not contradictory. It says it has and will continue to make the business environment more innovation and technology friendly and provide all sorts of incentives and assistance to start-ups and entrepreneurs, but also points at the duty of the rather ‘mature’ technology firms such as Alphabet or Facebook to turn in a part of their profits to the country where they make money.

The environment at G7 meeting is likely to be tense over this tax battle and indeed it could spiral out of control, especially if Trump feels that he has been cornered by other G7 leaders. This may suit the hosts as France wants to put the issue right in the eyes of global community in a manner that few can turn a blind eye to an issue which indeed is a burning question today, not just here in Paris, but also in the United States where the tech firms could soon become as easy targets as the banks had been in the last decade when they were seen as creaming off the society without any payback. Though Trump may launch counter measures to attack French products, the tech companies are unlikely to be able to escape the tax net anymore.

India would also do well to study the French tax and indeed think of bringing in something similar to ensure that the rapidly growing digital economy in the country benefits not just the corporate behemoths behind it, but also the consumers and the government by boosting the tax net a bit.

It may be worthwhile for the tech giants themselves to mend their ways and begin paying at least nominal taxes in countries where they do sizeable business. This would definitely ease the pressure and could in a way head off other countries adopting French-style taxes, else they may find themselves at the receiving end of rather stiff one-sided measures not too far down the road.

India

Cattle smuggling on Bangladesh border to go up before Eid: Intel

So far in 2020, 16 personnel of BSF’s South Bengal Frontier have been injured in various scuffles with trans-border criminals.

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New Delhi, July 9 : With just three weeks to go for Eid-ul-Adha, the Islamic festival of sacrifice, the Border Security Force (BSF) has deployed more force on India-Bangladesh border apprehending surge in cattle smuggling — an annual affair, but which dropped by 96 per cent last year.

As the festival — which is also called ”Qurbani Eid” — will be celebrated on July 31 this year, the BSF’s intelligence wing has alerted its border units about activities of cattle traffickers, considering the rising demand from Bangladesh.

The BSF, which guards the India-Bangladesh border, said the price of animals is higher than before this time due to rains being in full force and high water level in rivers flowing along the border.

Every year, a BSF official said, incidents of animal trafficking increase before Eid-ul-Adha along the 4,096 km India-Bangladesh border, the fifth-longest in the world, and spanning Assam (262 km), Tripura (856 km), Mizoram (180 km), Meghalaya (443 km), and West Bengal (2,217 km).

The business of cattle smuggling has been flourishing in West Bengal since many years because influential people are said to be involved. But since last year, the BSF”s South Bengal Frontier has almost stopped cattle trafficking.

It has been learned from reliable sources that the process of licensing ”Cattle Haats” in the border areas of Bangladesh is going to be completed soon. These ”Cattle Haats” see trade of most of the cattle smuggled from India.

The price of cattle in Bangladesh has increased significantly during this time of the year. At present, a buffalo of large size which is available in India for Rs 50,000 is priced in Bangladesh at about Rs 1.50 lakh and a bull of large size at Rs 80,000, an official said.

“Cattle smugglers who are involved in this nefarious and illegal business have several hundred crores (rupees) and put the lives of many poor, illiterate and unemployed youths at stake by luring them for a few thousand rupees,” the officer said.

Another officer said the more strict the border, the more money is paid to these youths who are called ”Rakhals” in the local language.

For every head of cattle taken across the international border, a ”Rakhal” gets Rs 8,000-10,000. For this money, the kingpin cattle smuggler puts the life of ”Rakhal” at stake.

Many of these ”rakhals” lose their lives while doing these illegal acts by drowning during floods, getting bitten by snakes, hit by lightning, being trampled by cattle, getting killed in a gang war or in BSF firing, BSF spokesperson Krishna Rao told IANS.

Rao said the BSF have made all their preparations to meet the challenge of cattle smuggling this year in the run-up to Eid.

“Border Security Force battalions deployed in Malda and Baharampur sectors have completed their preparations and are committed to thwart the nefarious designs of smugglers,” the officer said.

In the most vulnerable Border Out Posts (BoPs) such as Neem Teeta, Harudanga, Madanghat and Sovapur in Malda and Murshidabad districts, additional troopers and resources have been deployed, he said.

“In fact, the Ganga river enters Bangladesh from India under the responsibility of these border posts. When the water is released from the Farakka Dam, this river gets flooded which is exploited by cattle smugglers,” the officer said.

Explaining the method, the official said, the traffickers put the cattle in the river upto 8 to 10 km upstream.

“Before putting them in the river, they tie the legs of the cattle, put a bandage over the eyes and finally tie two banana stems on either side of the animal to keep it afloat.”

The BSF top brass took several calibrated measures to curb the menace last year as the trade promotes an approximate Rs 10,000 crore beef export industry of Bangladesh.

During this rainy season, the BSF has increased the deployment of night cameras, tractors, and speed boats to prevent animal trafficking before Eid-ul-Adha.

”Rakhals” of India and Bangladesh, at times, try to smuggle up to 400-500 heads of cattle, and attack the border guards with sharp-edged weapons, sticks and stones and bricks. Many times, they also fire with home-made firearms and hurl explosives

So far in 2020, 16 personnel of BSF’s South Bengal Frontier have been injured in various scuffles with trans-border criminals.

Its new Inspector General, Ashwani Kumar Singh has given clear instructions that attack on BSF personnel by these smugglers would not be tolerated and that trans-border crimes will be stopped at any cost.

(Rajnish Singh can be contacted at [email protected])

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India

Nepal bans all Indian news channels except Doordarshan

Earlier, Nepal has amended its map which show some Indian territory as part of it.

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KP Oli Napali PM

New Delhi, July 10 : Nepal has banned all Indian news channels, except DD News, for alleged propaganda against the country.

Reports say that Nepal cable operators have stopped getting signals of Indian news channels.

Nepal government spokesperson Yuvaraj Khatiwada said: “We request all not to disseminate news that infringes sovereignty and self-respect of Nepalis. This includes the media of neighbouring countries. We might seek both political and legal remedies.”

Earlier, Nepal has amended its map which show some Indian territory as part of it.

Nepal’s parliament on June 13 adopted unanimously the Constitution Amendment Bill, paving the way for accommodating the updated political-administrative map, which includes Indian areas of Kalapani, Lipulekh and Limpiyadhura, in its symbol.

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World

Melania Trump sculpture in Slovenia set ablaze

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Ljubljana, July 9 (IANS) A quirky wooden sculpture of US First Lady Melania Trump near her hometown in Slovenia was reported to have been set on fire, prompting its removal, a media report said on Thursday.

Brad Downey, the Berlin-based American artist who commissioned the statue, said it was targeted on July 4, said the BBC report.

The White House has not responded to the development.

The sculpture was carved out of a tree trunk on the outskirts of Sevnica, her hometown in central Slovenia.

The statue, which depicts Trump dressed in a blue coat similar to one she wore to her husband”s inauguration, received mixed reviews when it was erected in July 2019.

Trump, a model who grew up in Slovenia when it was part of Yugoslavia, moved to the US in the 1990s.

Since Donald Trump was elected US president in 2016, Sevnica has become a tourist site.

Residents have launched Melania-branded merchandise, including slippers, cakes, and burgers.

–IANS

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