President Trump has ordered an investigation of France's planned tax on tech companies, the White House announced Wednesday. According to Trump's administration, the tax which passed the parliamentary approval Thursday unfairly targets American companies.
The move gives the U.S. Trade Representative Robert Lighthizer the green light to investigate whether France's 3% digital-tax plan would hurt U.S. technology businesses. The probe could potentially lead to new retaliatory tariffs or other trade restrictions.
The Lighthizer's team conducted similar investigations previously on the Chinese trade practices and the European Union subsidies on a commercial aircraft.
Despite the U.S. threads, the French Senate passed Thursday a 3% levy on revenue made by tech giants such as Google, Amazon, Facebook inside the country.
As per the new law, any digital company which declared revenue of $850 worldwide, of which at least $ 22 million is generated in France, would be subject to the new tax.
The new tax would reportedly affect companies such as Alphabet, Apple, Facebook, Amazon, and Microsoft. In addition to that, it would also apply to the French online advertising agency Criteo as well as to several Chinese, German, Spanish, and British businesses.
The tax would be retroactively applied from early 2019, the French government confirmed, highlighting it would raise about EUR 400 million this year.
According to the French Ministry of Finance, the so-called digital tax is long overdue as big tech giants could book profits in tax heavens no matter whether the revenue originates from.
Paris has insisted on imposing such a tax on the European Union level, but it faced strong opposition from several member states, including Ireland, Czech Republic, Sweden, and Finland.
Some other EU Member States among which the United Kingdom, Austria, Spain, and Italy supported France and also announced plans to impose similar digital tax at the national level.
France promised to drop the digital tax once an international agreement is reached at the Organisation for Economic Co-operation and Development regarding the cross-border tax regulations for the digital economy.
French Finance Minister Bruno Le Maire criticized U.S. threats of retaliation, pointing out that France is sovereign on tax matters. Le Maire also insisted that the digital tax addresses all tech companies not only US-based tech giants, as suggested by the White House.
The Finance Minister asserted that the new tax was fully compliant with the international agreements. Therefore, Le Maire concluded, France finds it inappropriate to use a trading instrument to attack a sovereign state.
What is your opinion? Do you support or oppose President Trump's threats for imposing trade tariffs in response to the French digital tax?