U.S. Said to Investigate French Plan for Tax on Tech Giants
U.S.
Said to Investigate French Plan for Tax on Tech Giants
· USTR to
examine if France’s digital tax to hurt U.S. business
· Section 301
probe is same tool used to impose Chinese tariffs
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, the people
said. 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 Inc.’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 Union-wide 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 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.’’
The lawmakers included a suggestion
to use a section of the tax code that would double the rate of U.S. taxes on
French citizens and companies in the U.S.
The U.S. investigation would
threaten to further strain trans-Atlantic ties as the two sides prepare to
negotiate a limited trade agreement on industrial goods. The talks for a deal
have progressed slowly because the U.S. and EU are at odds over whether to
include agriculture in any final agreement. France is the country most
adamantly opposed to making any agriculture concessions. Trump’s threat to
impose a tariff of as much as 25% on European car exports has cast a cloud over
the negotiations as well.
Finance ministers and central
bankers at a Group of Seven meeting in Chantilly, France next week will discuss
international taxation and competition and the digital economy.
— With
assistance by William Horobin
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