The White House is launching an investigation into France’s proposed tax on tech giants, in a move that could lead to the US retaliating with taxes on French imports.
US trade representative Robert Lighthizer expressed concern that the digital services tax, expected to be passed by the French Senate on Thursday, “unfairly targets American companies”.
Mr Lighthizer’s agency will probe the tax – a previous investigation used the same provision of the US Trade Act to scrutinise China’s technology policies, leading to tariffs on $250 billion worth of Chinese imports.
The tax would impose a 3 per cent annual levy on French revenues of digital companies with yearly global sales worth more than 750 million euros and French revenue exceeding 25 million euros.
France’s lower house of parliament approved the pioneering tax last week.
The legislation aims to prevent multinationals such as Google, Amazon and Facebook from avoiding taxes by setting up headquarters in low-tax EU countries. The companies pay nearly no tax in countries where they have large sales like France.
The tech industry warns the move could result in higher costs for consumers. The levy could affect US companies, including Airbnb and Uber, as well as those from China and Europe.
— USTR (@USTradeRep) July 10, 2019
The US 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.
Those sentiments were echoed by Bob Atkinson, president of the Information Technology and Innovation Foundation, who also welcomed the investigation.
“Digital services taxes are an ill-disguised effort to target companies that are thought to be too powerful, too profitable, and too American,” Mr Atkinson said.