France Defies US Threat: Digital Tax On Tech Giants Confirmed


Lighthizer said the United States is very concerned that such a levy would unfairly with American companies. It could affect United States giants Apple, Facebook, Amazon and Google.

They had proposed a 3 percent tax on European advertising sales by digital companies, rather than the broad tax on the total revenues of large digital firms originally suggested.

Amazon, Apple, Facebook and Google are facing a new digital services tax in France.

"France's move to enact a unilateral, national digital tax opens the door to a fragmented, inefficient global tax system that would reduce business certainty and impede innovation, job creation, and economic growth worldwide", Ms Jennifer McCloskey, vice president of policy at ITI, a United States tech-industry association, said in a statement this week.

But French Economy Minister Bruno Le Maire France rejected the USA reaction, saying "threats" were not the way to resolve such disputes.

The new tax is expected to raise €400m ($450 million) for the French government in 2019, after which the corpus will grow.

While tech companies are presumably happy that the United States is hitting back at attempts to tax them more, this still sets up potential conflicts.

The 301 investigation - the same type of probe that led the USA to slap tariffs on China past year - is a rare tool for Washington to use against a close ally, underscoring the Trump administration's intent to continue playing tough on trade.

The French finance minister pointed out France is a sovereign nation that can make its own decisions regarding taxes, and said threatening tariffs is not the way to go.

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.

The three-percent tax will be levied on sales generated in France by multinational firms.

The so-called Section 301, under an outdated USA trade law adopted in 1974, allows the US president to unilaterally impose tariffs or other trade restrictions on foreign countries.

The French have reacted angrily to the news of the investigation and said it was free to decide how it applies taxes as a sovereign country. USA companies affected included Airbnb and Uber as well as those from China and Europe.

The US administration took a strong stance a year ago against the EU's own digital tax plans, calling European proposals to tax tech giants discriminatory "against US companies". Perhaps it might even prompt countries to finally agree on some common tax rules (imagine that).

At the European Union level had failed, the introduction of a digital tax for Online giants in March.