The USTrade Representative’s office (USTR) said it was completing an investigation into the French digital services tax. The United States will announce on the 12th (Monday) what retaliatory measures will be taken in response to the introduction of the French digital service tax. In March, France announced a 3 per cent tax on companies with global revenues of $834m and digital services in France with revenues of $27m.
U.S. President Donald Trump and French President Emmanuel Macron agreed in August to try to agree on a compromise, but the 90-day deadline for negotiations expires and no solution has been found. Questions have been raised about whether Mr. Trump will once again threaten to impose a tax on French wine.
A statement released Wednesday by the U.S. Trade Representative’s office said the USTR “is completing an investigation into the French Digital Services Tax (DST) under Section 301 of the Trade Act 1974 and will release its report on the investigation on Monday, December 2, 2019.” “At that time, a number of proposed investigations will also be announced.
Some US tech giants, such as Google, Apple, Facebook and Amazon, say French taxes are unfairly targeted at them. The White House has said that “France’s unilateral measures appear to target innovative American technology companies that provide services in different areas of the economy.” ”
France now argues that the global economic structure has shifted to a digital-based one, making the tax system of the twentieth century obsolete. The purpose of this tax is to eliminate tax loopholes and prevent digital companies from avoiding paying taxes. “The digital giants pay 14 pclessless less tax than Europe(smEs),” French Economy Minister Bruno Le Maire said in an interview. ”
In late August, the United States and Paris, France, discussed digital taxes, and President Trump threatened to impose tariffs on French wine if the deal fails.
U.S. Trade Representative Robert Lettsageze said the purpose of the investigation was to “determine whether the tax is discriminatory or unreasonable, and whether it imposes a burden or restriction on U.S. business.”
In testimony in August, Alan Lee, Facebook’s head of global tax policy, opposed the tax, saying it “creates difficulties for Facebook’s business model and will hinder growth and innovation in the digital economy.” ”
In written testimony, Nicholas Bramble, a trade policy adviser at Google, said French taxes were “very different from long-established tax rules, targeting only a small number of companies” and “could trigger specific digital activity. In France to provide ‘or offer controversy in other regions’.
Karan Bhatia, Google’s vice president of government affairs and public policy, said the company has expressed support for the modernization of digital regulation and affirmed its contribution to the communities in which it operates. However, Mr. Bhatia said the reforms must reflect fair business practices, “and we want governments to agree on a new framework for fair taxation that gives companies operating globally clear rules to promote sound business investment.” “