United States to probe French plan to tax tech companies

Donald Trump ordered the investigation

Late Wednesday, the Trump administration announced an investigation into the tax under the provision used previous year to probe China's technology policies, which led to tariffs on $250 billion worth of Chinese imports. It could affect USA giants Apple, Facebook, Amazon and Google. The bill foresees a 3-percent tax on the French revenues of digital companies with global revenue of more than 750 million euros, and French revenue over 25 million euros. U.S. Trade Representative Robert Lighthizer expressed concern that the tax, expected to be passed by the French Senate Thursday, July 4, 2019, "unfairly targets American companies". The investigation will come under the same provision used a year ago to examine China's tech policies, Section 301, which led to tariffs on $250 billion worth of Chinese imports.

The section 301 investigation, which is being run by the US Trade Representative's office, has said it will hold hearings to allow for public comment on the French tax issue for several weeks before issuing a final report.

"The President has directed that we investigate the effects of this legislation and determine whether it is discriminatory or unreasonable and burdens or restricts United States commerce", Lighthizer said.

"I invite my American friends to work with us at the OECD for a fair digital tax", Le Maire told French television station LCI in March.

The new tax will be based on sales generated in France, rather than on profits.

French Finance Minister Bruno Le Maire said in March that the tax on the French revenue of large internet companies could yield Euro 500 million per year.

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France has hit back against USA plans to investigate a planned tax on big digital companies, saying it was free to decide how it applies taxes as a sovereign country.

France's Finance Minister Bruno Le Maire is pictured.

In response to news about the investigation, France's finance ministry said the planned tax was in line with global agreements. The levy could affect U.S. companies including Airbnb and Uber as well as those from China and Europe. The UK, Spain, Italy, and Austria are considering similar sales taxes, raising the question of how the United States will respond if they take effect.

The European Commission has estimated that multinational digital companies with investments in the EU are on average taxed at a rate 14 percentage points below that of other firms.

The Information Technology Industry Council (ITI), a Washington-based trade association representing the information and communications technology industry, on Wednesday urged the USA government not to use tariffs as a remedy.

Flaying the French tax, Amazon called it "poorly constructed" and "discriminatory", adding that it does "significant harm to American and French consumers alike".

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