U.S. probes French plans to tax tech giants
Trump officials claim levies discriminate against U.S. business
WASHINGTON — In an unusual move that threatens to worsen trade tensions with Europe, the Trump administration said it will investigate whether a proposed French tax on tech companies discriminates against U.S. business, a step that could lead Washington to impose trade penalties.
The 301 investigation — the same type of probe that led the U.S. to slap tariffs on China last year — is a rare tool for Washington to use against a close ally, underscoring the Trump administration’s intent to continue playing tough on trade.
The investigation illustrates growing alarm among U.S. officials and industry executives about the prospect of new taxes on technology giants spreading beyond France. A number of other countries are considering similar levies amid the belief that wealthy U.S. tech giants aren’t paying enough tax worldwide.
“The United States is very concerned that the digital services tax which is expected to pass the French Senate tomorrow unfairly targets American companies,” U.S. Trade Representative Robert Lighthizer said in a statement Wednesday as his office announced the probe. “The President 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.”
French officials didn’t provide comment.
The French levy would impose a 3 percent tax on certain revenue that large tech companies earn inside France. Legislators call it a tax on Les GAFA — the acronym for Google, Amazon, Facebook and Apple — companies that France has accused of paying insufficient income tax.
The measure is close to passing both houses of Parliament and could soon be signed by President Emmanuel Macron, who has voiced support for the tax.
“The fact that these companies pay less tax than a cheese producer in Quercy is a real problem,” French Finance Minister Bruno Le Maire, a vocal proponent of the measure, said in an April 3 interview with Le Parisien.
A U.S. tech industry trade association this week criticized the French measure, saying tax disputes should be settled through a multilateral negotiation currently being led by the Organization for Economic Cooperation and Development.
“France’s move to enact a unilateral, national digital tax opens the door to a fragmented, inefficient global tax system that would reduce business certainty and impede innovation, job creation, and economic growth worldwide,” Jennifer McCloskey, vice president of policy at ITI, a U.S. tech industry association, said in a statement this week. “We recognize the challenges that arise as the global economy becomes increasingly digitized but proceeding unilaterally would complicate economic relationships around the world and lead to undesirable measures to address France’s action.”
Google on Wednesday defended its global tax payments and voiced support for a new “comprehensive and multilateral agreement” on tax, rather than “discriminatory unilateral taxes.”
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.”
“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,” Amazon said.
“France’s move to enact a unilateral, national digital tax opens the door to a fragmented, inefficient global tax system that would reduce business certainty and impede innovation, job creation, and economic growth worldwide.” Jennifer McCloskey, vice president of policy at ITI