US launched an enquiry into France’s latest technology tax, which US accused, targets only US tech companies. The move, if proved biased, would lead to retaliatory tariff by US, imposing higher tax and trade restrictions on French goods.
On Thursday, French lawmakers passed the tax on technology companies like Google, Amazon and Facebook, despite US warning of unfairly targeting US tech giants.
A day before the legislation was passed, US President Donald Trump ordered an investigation into France’s “digital tax”. On Wednesday, US Trade Representative Robert Lighthizer issued a statement, that said the French tax “is discriminatory or unreasonable and burdens or restricts United States commerce.”
Lighthizer 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,” It gives US the right to question and investigate the matter. After China and the EU, this could lead to another global trade war.
The tax levies 3% duty over the revenue earned by the internet companies for their digital services in France. France proposed that the tax would be applicable on any digital company which earns over €750million per year and makes revenue of at least €25million from France. So far about 30 companies fall into the ambit of this tax.
Responding to US threats French finance minister, Bruno Le Maire, said that both the nations should have discussion and go for a mutual agreement on the “fair taxation” of these companies rather than using threats. Maire released a statement, saying “France is sovereign, and France decides its own tax rules. And this will continue to be the case.”
The tax would be applicable from early this year, and is estimated to generate about €400million by the end of 2019.
In a statement, Amazon criticized the tax calling it “poorly constructed” and “discriminatory,” and added that it would cause “significant harm to American and French consumers alike.”
“We applaud the Trump Administration for taking decisive action against France and for signaling to all of America’s trading partners that the U.S. government will not acquiesce to tax and trade policies that discriminate against American businesses,” the Amazon statement said.