U.S. to look into French plan for tax on tech giants
The White House will investigate a French plan to impose taxes on technology companies, a move that’s been a prelude to new U.S. tariffs under the Trump administration, according to two people familiar with the matter.
The announcement is expected as early as Wednesday, according to two people familiar with the matter. It would give U.S. Trade Representative Robert Lighthizer up to a year to examine whether the plan would hurt U.S. technology firms, and suggest remedies.
The so-called 301 investigation is the same tool President Donald Trump used to impose tariffs on Chinese goods because of the country’s alleged theft of intellectual property.
The U.S. has lobbied aggressively to stop European countries from taxing the revenue of American tech companies like Facebook Inc. and Alphabet’s Google. Lighthizer told lawmakers last month that the push for a digital tax would unfairly hit U.S. businesses.
“I think it’s a tax that is geared toward
hitting American companies disproportionately,” Lighthizer told the House Ways and Means committee on June 19. “I think it’s something the United States has got to take strong action on.”
France’s proposed 3% levy would hit global tech companies with at least 750 million euros ($845 million) in worldwide revenue and digital sales totaling 25 million euros in France.
The country’s National Assembly adopted the measure last week and the French Senate is due to vote on it Thursday. Other European countries have started to pursue their own digital tax plans after a European Unionwide effort stalled earlier this year.
Finance Minister Bruno Le Maire has said France isn’t the only country advancing a tax on digital companies and that using the threat of “blackmail” to stop them is pointless.
“I invite my American friends to work with us at the OECD for a fair digital tax,” Le Maire told French television station LCI in March.
The Organization for Economic Cooperation and Development is working
on a global solution on taxation for digital companies by 2020.
A spokesman for the French Finance Ministry declined to comment on Wednesday. Lawmaker Outcry The U.S. can levy tariffs specifically on products from France even though it is a member of the European Union, said Douglas Heffner, a international trade litigator at law firm Drinker Biddle & Reath. Under Section 301 of the Trade Act of 1974, the president has authority to impose tariffs or take other restrictive measures if it’s determined that a foreign country’s trading rules are damaging to U.S. businesses.
“The U.S. can be very creative,” Heffner said. “They don’t have to just go after digital products. They can go after products where they have leverage.”
Senators Chuck Grassley and Ron Wyden, the top Republican and Democrat on the Senate Finance Committee, sent a letter to Treasury Secretary Steven Mnuchin last month asking him to bolster efforts to convince France to back off from its digital tax. The lawmakers urged the U.S. to look at “all available tools under U.S. law to address such targeted and discriminatory taxation.’’