- US President Donald Trump has ordered an investigation into France's planned tax on tech giants - a move that could result in retaliatory tariffs.
US President Donald Trump has ordered an investigation into France’s planned tax on tech giants – a move that could result in retaliatory tariffs.
His trade representative said the US was “very concerned” that the tax “unfairly targets American companies”.
On Thursday the French parliament is due to approve a 3% levy on revenue made by such companies as Google and Facebook inside the country.
France argues that these firms currently exploit global tax loopholes.
Tech giants are able to locate their headquarters in low-tax countries where they declare most of their profits, thereby minimising their tax bill.
The new tax is expected to raise about €400m ($450m; £360m) this year.
Any digital company with revenue of more than €750m – of which at least €25m is generated in France – would be subject to the tax.
What has the US said?
“[Mr Trump] 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,” the statement from trade representative Robert Lighthizer said.
The US inquiry could pave the way for punitive tariffs, which Mr Trump has imposed on several occasions since taking office.
Previous investigations launched by Washington have covered European Union and Chinese trade practices.
The latest inquiry was welcomed by Republican Senate Finance Committee Chairman Chuck Grassley and Senator Ron Wyden, the senior Democrat on the panel.
“The digital services tax that France and other European countries are pursuing is clearly protectionist and unfairly targets American companies in a way that will cost US jobs and harm American workers,” they said in a joint statement.
The technology industry lobby group ITI welcomed the investigation but cautioned against tariffs.
“We support the US government’s efforts to investigate these complex trade issues but urge it to pursue the 301 investigation in a spirit of international co-operation and without using tariffs as a remedy,” said Jennifer McCloskey, vice-president of policy.
What has France said?
The French government has argued that companies should not be able to escape paying tax if their headquarters are based elsewhere.
The technology industry lobby group ITI welcomed the investigation but cautioned against tariffs.
“We support the US government’s efforts to investigate these complex trade issues but urge it to pursue the 301 investigation in a spirit of international co-operation and without using tariffs as a remedy,” said Jennifer McCloskey, vice-president of policy.
What has France said?
The French government has argued that companies should not be able to escape paying tax if their headquarters are based elsewhere.
It announced its own tax on big technology firms last year after EU-wide efforts stalled.
The French initiative is a response to a growing public feeling that countries are losing out on billions in taxes because of the intangible and extra-territorial nature of the digital economy, BBC Paris Correspondent Hugh Schofield says.
Around 30 – mostly American companies – will pay the tax. Chinese, German, Spanish and British firms will also be affected.
Countries including France and the UK have accused firms of routing some profits through low-tax EU member states such as Ireland and Luxembourg.
The big US tech companies have argued they are complying with national and international tax laws.
ast year after EU-wide efforts stalled.
The French initiative is a response to a growing public feeling that countries are losing out on billions in taxes because of the intangible and extra-territorial nature of the digital economy, BBC Paris Correspondent Hugh Schofield says.
Around 30 – mostly American companies – will pay the tax. Chinese, German, Spanish and British firms will also be affected.
Countries including France and the UK have accused firms of routing some profits through low-tax EU member states such as Ireland and Luxembourg.
The big US tech companies have argued they are complying with national and international tax laws.
