The White House is launching an investigation into France's proposed tax on internet giants like Google, Amazon and Facebook - a move that could lead to USA taxes on French imports.
France pushed ahead with the tax after European Union countries failed to agree a levy across the bloc in the face of opposition from Ireland and some Nordic countries. The measure would levy a 3 percent tax on certain revenue that major tech companies earn in France. Currently, the companies pay almost no tax in countries like France where they have large sales.
The move gives Lighthizer up to a year to investigate if France's digital-tax plan would hurt United Statestechnology companies. Political pressure to respond has been growing as local retailers in high streets and online have been disadvantaged; French President Emmanuel Macron has said that taxing big tech more heavily is an issue of social justice.
Some of the companies that could be affected include Apple, Facebook and Google. Trump's threat to impose a tariff of as much as 25% on European auto exports has cast a cloud over the negotiations as well. "This is a critical step toward preventing protectionist taxes on global trade", CCIA official Matt Schruers said in a statement, calling on France "to lead the effort toward more ambitious global tax reform, instead of the discriminatory national tax measures that harm global trade".
The European Commission has estimated that multinational digital companies with investments in the EU are on average taxed at a rate 14 percentage points below that of other firms.
"Between allies we can and should solve our disputes not by threats but by other means", Le Maire told senators. This is expected by the end of 2020.
In a joint statement, Republican Chuck Grassley of Iowa, who is committee chairman, and Democrat Ron Wyden of OR said: "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 U.S. jobs and harm American workers".
The legislation should be enacted within 21 days, a spokeswoman for the Senate said, unless the government or lawmakers ask for a final review by the Constitutional Council.
The investigation illustrates growing alarm among United States officials and industry executives about the prospect of new taxes on technology giants spreading beyond France.
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