Published: Thu, July 11, 2019
Finance | By Loren Pratt

France adopts digital tax on tech giants like Google, Facebook

France adopts digital tax on tech giants like Google, Facebook

On Wednesday Donald Trump ordered an investigation into the French tax, a probe that could lead to the U.S. imposing tariffs or other trade restrictions.

France has hit back against U.S. plans to investigate a planned tax on big digital companies, saying it was free to decide how it applies taxes as a sovereign country. The section 301 investigation, which is being run by the United States trade representative's office, has said it will hold hearings to allow for public comment on the French tax issue for several weeks before issuing a final report.

France on Thursday adopted a pioneering tax on internet giants like Google, Amazon and Facebook despite US threats of new tariffs on French imports if Paris went ahead with the plan. The country's National Assembly adopted the measure last week and the French Senate is due to vote on it Thursday.

But French economy minister Bruno Le Maire France rejected the U.S. reaction on Thursday, saying "threats" were not the way to resolve such disputes.

The French Senate estimated that the tax could bring in 400 million euros ($450 million) this year and 650 million next. Currently, the companies pay almost no tax in countries where they have large sales like France.

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 US taxes on French imports.

It will target companies such as Google and Facebook with a 3% levy on revenue made inside France. 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.

The French government is to impose a tax of up to 18 euros ($20) on plane tickets for all flights from airports in France to fund less-polluting transportation projects, a minister said Tuesday.

Lighthizer said the United States "will continue its efforts with other countries at the OECD to reach a multilateral agreement to address the challenges to the worldwide tax system posed by an increasingly digitized global economy".

Amazon called the probe "an important step toward successfully addressing the poorly constructed, discriminatory French (tax), which if implemented, will cause significant harm to American and French consumers alike".

Technology industry lobby group ITI, which represents Apple, Amazon, Google and other tech companies, urged the United States not to resort to tariffs in the dispute.

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