French Senate adopts tax on digital giants

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A French tax on tech companies was approved by parliament on Thursday after the Senate approved a final version of the bill in defiance of a U.S. investigation.

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The vote showed the issue had met transpartisan support in France. The tax is due to kick in retroactively from the start of 2019.

U.S. Trade Representative Robert Lighthizer on Wednesday announced an investigation into a proposed “digital services tax” in France amid the Trump administration concerns that the measure unfairly targets U.S. tech firms.

The digital services tax would apply a 3 percent levy on tech firms with at least 750 million euros (about $845 million) in global revenue and 25 million euros (about $281 million) of digital sales in France.

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With the “Section 301” investigation, Lighthizer’s office will have up to one year to determine the proposed tax’s impact on U.S. firms and whether it constitutes an unfair trade practice. The Trump administration ordered a similar investigation ahead of the decision to impose steel tariffs on China.

“The United States is very concerned that the digital services tax which is expected to pass the French Senate tomorrow unfairly targets American companies,” Lighthizer said in a statement.  “The President has directed that we investigate the effects of this legislation and determine whether it is discriminatory or unreasonable and burdens or restricts United States commerce.”

Bloomberg News was first to report on the investigation.

The digital services tax is likely to impact Alphabet-owned Google, Apple, Amazon and Facebook, among other U.S. firms. Companies in China, Germany, Spain and the United Kingdom will also be affected, according to Reuters.

The vey is said to be needed because big, multinational internet companies such as Facebook and Amazon are currently able to book profits in low-tax countries, no matter where the revenue originates.

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Lighthizer expressed concern about the French proposal in June during an appearance before the House Ways and Means committee.

“I commend President Trump and Ambassador Lighthizer for taking this important step to hold France accountable for imposing a digital tax that directly and inexcusably targets a handful of U.S. companies,” said Rep. Kevin Brady, R-Texas, the top Republican on the Ways and Means Committee.

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