French lawmakers approved a bill imposing new tax on services provided by large internet companies, such as Amazon, Google and Facebook. The move is likely to invite retaliatory tariffs from the US administration.
The United States Trade Representative, Robert Lighthizer, called the French tax a discrimination against American companies and vowed to launch a so-called Section 301 investigation, which could end up imposing taxes on French products.
The French taxes are slated to take effect from January 2020 and will impose a 3 percent tax on revenue earned by large internet companies in France. It would apply to businesses with global revenue of more than €750 million ($845 million) and €25 million ($28 million) in France.
Shortly after the bill was passed, French finance minister Bruno Le Maire responded to the threat of retaliation. “There are other ways between allies to solve our differences, there is no need for threats,” Le Maire told reporters. “We can solve our differences through negotiations and through discussions.”
French President Emmanuel Macron will now decide whether to sign the bill into law.
Several European countries are considering new taxes on digital companies as part of a race to better regulate the internet and capture more revenue from their activities.The UK has already announced plans to apply a 2 percent levy on digital services sold by profitable companies with annual global revenue of at least £500 million ($627 million). It would be implemented in April 2020.
G20 finance ministers in June broadly supported a plan developed by the Organization for Economic Cooperation and Development (OECD) to overhaul global corporate tax rules and address challenges in taxing digital companies. But more work is needed on the proposal, which is designed with digital companies in mind but also has major implications for traditional multinational corporations.
