USTR Slams France's Digital Services Tax, Considers 100% Tariffs on French Products

Daniel Fowler
December 3, 2019

The tax discriminates against United States tech giants Apple, Amazon, Facebook and Google, the Trump administration says.

The Office of the US Trade Representative says France's new digital services tax discriminates against US companies and says that the tariffs could reach 100%.

The U.S. Trade Representative's office said its "Section 301" investigation found that the French tax was "inconsistent with prevailing principles of worldwide tax policy, and is unusually burdensome for affected U.S. companies", including Alphabet Inc's Google GOOGL.O , Facebook Inc FB.O , Apple Inc AAPL.O and Amazon.com Inc AMZN.O .

"USTR's decision today sends a clear signal that the United States will take action against digital tax regimes that discriminate or otherwise impose undue burdens on U.S. companies", United States Trade Representative Robert Lighthizer said in the department statement.

The USTR is accepting public comment until January 6, 2020, with a public hearing to be held on January 7.

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But prior to the release of the USTR's report, a French official said that France would dispute the trade agency's findings, repeating Paris' contention that the digital tax is not aimed specifically at USA technology companies.

The French tax, enacted earlier this year, imposes a three percent levy on the revenues earned by technology firms in France, which often come from online advertising and other digital services.

The US move "sends a clear signal that the United States will take action against digital tax regimes that discriminate or otherwise impose undue burdens on US companies", said trade representative Robert Lighthizer.

The tax affects companies with least 750 million euros ($830 million) in annual global revenue on their digital activities.

The Monday release also included a reactive notice which threatened to target a number of French goods for tariffs, including handbags, porcelain, beauty products, cheeses, sparkling wine, soap and more items. With talks between Washington and Paris not yielding much result, however, France's Senate gave the final approval for it last month.

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