United States opens investigation into French plan for tax on tech giants

United States opens investigation into French plan for tax on tech giants

United States opens investigation into French plan for tax on tech giants

"The United States is very concerned that the digital services tax which is expected to pass the French Senate tomorrow unfairly targets American companies", Lighthizer said in a statement Wednesday.

National Foreign Trade Council (NFTC) Vice President for Global Trade and Innovation Jake Colvin applauded the announcement, saying that France's digital services tax amounts to a discriminatory tariff on American technology companies and threatens transatlantic trade ties.

On Thursday, France's senate approved a tax targeting the French revenue of about 30 tech companies - most of which are based in the U.S. The move comes in spite of the Trump administration claiming the tax "unfairly targets American companies", and warnings that the USA could respond with its own tariffs or trade restrictions.

The new French tax applies to companies that generate worldwide revenues on their digital services of at least 750 million euros ($845 million / £673 million), with 25 million euros ($28 million / £22 million) generated within France, explains CNBC.

Finance Minister Bruno Le Maire has said France isn't the only country advancing a tax on digital companies and that using the threat of "blackmail" to stop them is pointless.

"Between allies we can and should solve our disputes not by threats but through other ways", Le Maire told senators ahead of a final vote on the tax.

The French Finance Ministry has estimated that the tax would raise about 500 million euros annually at first - but predicted that collections would rise "quickly".

"Digital giants pay 14 percent less tax than small- and medium-sized European companies", he added.

France had indicated in December 2018 that it would press ahead with its own taxation on tech firms after European Union finance ministers failed to agree a tax on digital revenues, despite France and Germany championing a compromise digital tax that was much narrower in scope than a plan originally proposed in the spring of 2018.

The large tech companies themselves, despite being targeted by the proposed French tax, are urging the Trump administration to not impose tariffs on European imports.

The proposed digital services tax may not be the only grounds for the beginning of a trade war between with US and Europe, however. "We support the USA government's efforts to investigate these complex trade issues but urge it to pursue the 301 investigation in a spirit of global cooperation and without using tariffs as a remedy", Jennifer McCloskey, ITI's vice president of policy, said in a statement. However, French officials stressed the law will affect around 30 companies, including some from China, Germany, Spain and the United Kingdom, not just the US.

"We support the United States government's efforts to investigate these complex trade issues but urge it to pursue the 301 investigation in a spirit of global cooperation and without using tariffs as a remedy", Jennifer McCloskey, ITI's vice president of policy, said in a statement.

Republican Senate Finance Committee Chairman Chuck Grassley and Ron Wyden, the senior Democrat on the panel, for their part, hailed the investigation. Perhaps it might even prompt countries to finally agree on some common tax rules (imagine that).

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