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France passes controversial tax on tech companies

France passes controversial tax on tech companies


The US is investigating the plan

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french flag (flickr)

France has passed a controversial tax on “digital services” that will hit American tech giants, as the United States says it will investigate the plan.

Under the bill, just passed by the French Senate, tech companies with more than €750 million in global revenue and €25 million in French revenue will be required to pay a 3 percent tax on total annual revenue generated by providing services to French users. The move will affect major players like Google, Facebook, and Amazon, and was made as plans for EU-wide tax changes seemed to stall.

Tech companies would pay a 3 percent tax on annual revenue

Even before the bill was passed, the United States said it was launching an investigation into the legislation. In a statement on Wednesday, the Office of the United States Trade Representative (USTR) said the tax and statements from French officials “suggest that France is unfairly targeting the tax at certain US-based technology companies.”

“The United States is very concerned that the digital services tax which is expected to pass the French Senate tomorrow unfairly targets American companies,” USTR Robert Lighthizer said in the statement, adding that President Trump had ordered the investigation. Once the investigation is complete, according to the statement, the US will decide on a response.

American business groups jumped to slam the French proposal. The US Chamber of Commerce said in a statement that the plan “would harm American businesses and workers.” The Information Technology Industry Council, which counts companies like Google and Facebook among its members, said in a statement that France’s move was “a significant and concerning departure” from international efforts.

The Information Technology and Innovation Foundation, a policy think tank, was also critical of the proposal, calling it “an ill-disguised effort to target companies that are thought to be too powerful, too profitable, and too American.”

Correction, 11:18AM ET: A previous version of this article misattributed a statement from the Information Technology and Innovation Foundation to the Information Technology Industry Council.