President Trump has just ordered an investigation into the French digital services tax, which is an “ill-disguised effort to target companies that are thought to be too powerful, too profitable, and too American,” according to the Information Technology and Innovation Foundation, a policy think tank.
Recently proposed EU-wide tax changes have had their implementation delayed until late 2020; but a bill, just passed by the French Senate, requires tech companies with more than $750 million in global revenue and €25 million in French revenue, to pay a 3% tax on their total annual revenue on French services.
The Information Technology Industry Council, which includes Google and Facebook amongst its members, said that France’s move was a “significant and concerning departure from international efforts”, in a recent statement. The US Chamber of Commerce also released a statement saying the plan would “harm American businesses and workers.”
Around 30 companies will be affected -mainly US groups- including Alphabet, Facebook, Amazon and Microsoft. USTR Robert Lighthizer said that “The United States is very concerned that the digital services tax, which is expected to pass the French Senate tomorrow, unfairly targets American companies.” Chinese, German, Spanish and British firms will be affected by the tax too.
France is hoping for either one of two outcomes- that countries will either implement their own, independent taxes; or that this move gives momentum to calls for a multilateral agreement of how digital firms should be taxed globally.