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France, Not Waiting for European Union, to Tax U.S. Tech Firms as ’19 Starts

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PARIS — With the so-called Yellow Vest movement forcing concessions that have widened the country’s budget shortfall, the French government is accelerating a plan to place hefty taxes on American technology giants that have long maneuvered to keep their bills low while reaping huge sums of money.

France has been working with other countries on a European Union-wide digital tax on companies including Amazon, Apple, Facebook and Google, but some members of the bloc have balked at the proposal.

Bruno Le Maire, the French finance minister, said last week that France would move ahead on its own if the union did not approve such a tax by March.

On Monday, he moved up that date.

“The tax will be introduced no matter what on Jan. 1, and it will be for the whole of 2019,” Mr. Le Maire said. A week ago, he urged the public to “fight with me” on the issue in an interview on French radio, during which he said, “It’s time for these companies to pay the taxes that they owe.”

Mr. Le Maire estimated the total tax bill for the companies affected at around 500 million euros, or $568 million. It will help pay for €10 billion in emergency spending announced last week by President Emmanuel Macron after waves of angry citizens took to the streets of Paris and other cities to protest growing inequality.

The tax, Mr. Le Maire said, would most likely cover not only the companies’ direct sales in France, but also revenue from online marketplaces and the resale of private data. He declined to discuss other details, including the means for introducing the tax or the rate of taxation.

The proposal being considered by the European Commission would tax digital media companies based on where in the 28-member European Union they generate revenue, rather than in the often low-tax countries, like Ireland and Luxembourg, where they have regional headquarters.

The push, which has been led by France and Germany, has been resisted by the low-tax countries and has also raised concerns that it will exacerbate Europe’s simmering trade tensions with the United States.

France’s decision to go its own way for now did not appear to derail the European Commission’s proposal.

A commission spokesman noted in a statement that “about a dozen E.U. countries already have or are considering a form of taxation of digital activities.”

Those countries include Britain, where officials recently unveiled a proposal to impose a 2 percent tax on revenue that social media platforms, search engines and online marketplaces earn there. Spain is introducing its own 3 percent tax on online advertising services, brokering services and the resale of personal data.

But, the commission spokesman noted, “the announcement by France does make it even more urgent for the E.U. to agree on a common digital services tax.”

Mr. Le Maire said he still hoped that a union-wide agreement could be reached by March.

Amazon, Apple and Twitter declined to comment. Facebook and Google did not immediately respond to requests for comment, although the director general of Google France told reporters this month, “Google will pay if a tax on revenue is put in place” in France or in the European Union.

Large technology companies have long avoided paying taxes comparable to other businesses in the European countries where they operate.

Facebook, for instance, paid corporate taxes of €1.9 million in 2017 in France on stated revenue of €55.9 million. The company has more than 34 million users in the country, and much of its revenue was logged in Ireland. Apple paid around €19 million in 2017 taxes in France.

Amazon, too, does business across the union, but has benefited by having its regional headquarters in the low-tax haven of Luxembourg. The European Commission estimates that the online retailer and other companies pay an average effective tax rate of just 9.5 percent, compared with the roughly 23 percent paid by traditional businesses.

The big companies are not alone in opposing the commission’s digital tax proposal. European start-ups have said it would handicap an expanding tech sector in the region that has struggled to match the scale of markets in the United States and China.

France and Germany responded to such concerns by narrowing the proposal to include only larger technology companies, particularly advertising-focused companies like Facebook and Google. Those changes have not mollified everyone.

France’s imposition of a digital tax is one front in a wider campaign in Europe to target American technology companies amid growing concerns about their power and influence in society as well as their business practices.

Germany has enacted a law requiring Facebook and Twitter to remove flagged hate speech within 24 hours or face fines. France has passed rules allowing judges to order the removal of misinformation around elections.

Regulators at the European Commission have also targeted Google, Apple and Amazon for antitrust violations, imposing billions of euros in fines and orders to return unpaid taxes.

The French government sued Google this year for €1.12 billion in taxes it claims the company avoided paying on advertising revenue earned. A Paris court ruled that the government could not collect because Google had declared that the revenue belonged to an Irish subsidiary. The government is appealing.

The European Commission fined Google €2.4 billion last year for abusing its dominant market position, while companies like Apple, Amazon and Qualcomm have also been investigated or penalized.

Amazon reached a settlement in May over a long-running dispute with French tax authorities, who had been seeking nearly €200 million euros in back taxes, interest and penalties for the 2006 to 2010 fiscal years in relation to “the allocation of income between foreign jurisdictions.” The government did not disclose the size of the settlement.

And last year, the European Union’s commissioner for competition, Margrethe Vestager, ordered Luxembourg to collect around 250 million euros in unpaid taxes from Amazon.

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Canadian tech diversity and inclusion in the spotlight

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Diversity and inclusion are hot-button issues, but for all the attention they get, there’s still work to be done in the tech sector, according to a recent Gartner blog.

Citing a range of challenges that include pay inequity, lack of diversity in corporate management, and difficulty recruiting diverse talent, the blog suggests three possible remedies for organizations trying to become more diverse and inclusive: having a long-term plan but focusing on one aspect that will make the most benefit, setting targets and making leadership accountable, and committing resources.

The call for such strategies finds support in a report from the Brookfield Institute revealing that Canada’s technology sector has a disappointing track record when it comes to inclusion and equity, with women “four times less likely to be employed in the sector than men, and earning on average $7,300 less than men in technology jobs.”

The findings are just as grim in a January 2020 report funded by Canada’s Future Skills Centre. According to this document, despite corporate commitments to diversity, “decades of initiatives designed to advance women in technology have scarcely had an effect: The proportion of women in engineering and computer science in Canada has changed little in 25 years.”

And women are not the only disadvantaged group, says the report. “The under-employment of skilled immigrants and under-representation of women and other groups in the ICT industry suggests that recruitment and retention policies and practices of the very firms complaining about this [skills] gap may be contributing to the problem.”

Until we do a better job of addressing inclusion and diversity, career opportunities will continue to be limited for women, internationally educated professionals, racialized minorities, First Nations, Inuit and Métis people. In addition to being a very human issue, this is also one that perpetuates the ICT skills gap by failing to tap into a supply of well-qualified labour.

On the bright side, there are technology companies and organizations across Canada that are truly determined to create opportunities for those who are under-represented in the digital talent pool. There is also an opportunity to recognize their efforts during Channel Innovation 2021: Adapting to the New Customer Experience, a 2.5-hour, virtual event on April 28, 2021.

A showcase for independent software vendors (ISVs) and Canadian channel innovators, the Channel Innovation 2021 celebration will take place on CIA-TV, a unique ITWC platform that allows the audience to take in the show, download related content and videos, and network in live breakout rooms. There are six award categories, including the C4 Award for Diversity and Inclusion. Nominating is simple. Whether a self- or third-party nomination, there are only two main questions to answer and an opportunity to include a supporting document or image.

Winning entries will be announced during the celebration and profiled in the Channel Daily News Magazine and in Direction Informatique, ITWC’s French-language publication devoted to the Quebec marketplace. They will also receive a digital badge for use on their websites and on social media to help gain industry-wide recognition and end-user exposure.

The media attention and recognition are reason enough to vie for this honour, and we always need things to celebrate during a global pandemic, but the real value in awards for diversity and inclusion is in setting an example for others to follow. The news is full of the ways we are falling down when it comes to equity in the IT sector. Let’s take some time to highlight the success stories and encourage other tech innovators to step up.

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Leading Canadian tech entrepreneur Saadia Muzaffar to give virtual keynote in Peterborough on March 9

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In celebration of International Women’s Day, one of Canada’s leading female tech entrepreneurs will be giving a virtual keynote for residents of Peterborough and the Kawarthas on Tuesday, March 9th at 7 p.m.

The Innovation Cluster is hosting Saadia Muzaffar as part of its ‘Electric City Talks’ series.

Muzaffar is a tech entrepreneur, author, and passionate advocate of responsible innovation, decent work for everyone, and prosperity of immigrant talent in science, technology, engineering, and mathematics (STEM). She is the founder of TechGirls Canada, a hub for Canadian women in STEM, and co-founder of Tech Reset Canada, a group of business people, technologists, and other residents advocating for innovation that is focused on the public good.

In 2017, Muzaffar was featured in Canada 150 Women, a book about 150 of the most influential and groundbreaking women in Canada. Her work has been featured in CNNMoney, BBC World, Fortune Magazine, The Globe and Mail, VICE, CBC, TVO, and Chatelaine.

Muzaffar’s March 9th talk, entitled ‘Redefining Term Sheets: Success, Solidarity, & The Future We Want’, will inspire women to achieve success in all areas of life, including in business by providing strategies for obtaining funding.

“It is impossible to explain how women only get 2.2 per cent of funding for their ventures while we constitute a majority of the population, without acknowledging long-standing structural and systemic bias,” Muzaffar says, describing her talk. “Women know these odds in our bones because we feel them in too many boardrooms, banks, media advertisements, and venture competitions — yet women are the fastest-growing demographic in new businesses.”

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ARK’s Cathie Wood joins board of Canadian tech firm mimik

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ARK Invest’s Cathie Wood is joining the board of Canadian technology company mimik.

Vancouver-based mimik is an edge computing company that effectively turns devices like phones into private cloud servers. It has already teamed up with Amazon Web Services and IBM on edge computing – two of the bigger players in the space.

The AWS partnership gives software developers access to mimik’s cloud platform. Together, edge devices including smart phones, tablets, and Internet of Things (IoT) products can act as extensions of the AWS cloud. With the IBM partnership, mimik’s technology will be included in automation and digital transformation across manufacturing, retail, IoT and healthcare.

All of mimik’s business lines fit in with Wood’s broad ‘next generation internet’ thesis, one of her big five investment themes. The company itself is private and Wood is not an investor. 

However, as Citywire noted in January, Wood has hinted in interviews that ARK is exploring the launch of a private markets strategy. 

Wood joins a relatively high profile board at mimik. Other members include  Allen Salmasi, a pioneer in mobile technology who was previously with Qualcomm, and Ori Sasson, managing director of Primera Capital, who was an investor in VMWare and other technology companies.

‘I’ve always believed in backing founders who are at the forefront of innovation,’ Wood said in a statement on her decision to join mimik. ‘At mimik, [they] have built a foundation for the next generation of cloud computing.’ 

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