European Union hesitates to back France over USA tariff threat

Friday, 12 Jul, 2019

"The United States is very concerned that the digital services tax. unfairly targets American companies", he said.

The legislation is referred to as the GAFA tax, which is an acronym for Google, Apple, Facebook and Amazon.

Amid rising public outrage at the minimal tax paid by some of the world's richest firms, French lawmakers are due to approve the proposed Digital Services Tax (DST) law as soon as Thursday.

France's lower house of parliament approved Thursday a tax bill targeting multinational digital giants.

They had proposed a 3 percent tax on European advertising sales by digital companies, rather than the broad tax on the total revenues of large digital firms originally suggested. Large tech companies, under the proposal, are those with digital revenue of more than €750 million ($845 million) worldwide and more than €25 million ($28 million) in France.

The new tax will apply to the French revenues of approximately 30 major companies, most of which are US-based.

France's Finance Minister Bruno Le Maire is pictured.

The French Finance Ministry has estimated that the tax would raise about 500 million euros annually (US$563 million) at first - but predicted fast growth.

That prompted countries including France, Austria, Britain, Spain and Italy to announce plans for their own tax at the national level. "We support the U.S. government's efforts to investigate these complex trade issues but urge it to pursue the 301 investigation in a spirit of global cooperation and without using tariffs as a remedy", Jennifer McCloskey, ITI's vice president of policy, said in a statement. The levy could affect United States companies including Airbnb and Uber as well as those from China and Europe.

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.

At the European Union level had failed, the introduction of a digital tax for Online giants in March.

Another US trade group, the Computer and Communications Industry Association, also said the French proposal discriminated against American companies.

The so-called Section 301 investigation is the primary tool the Trump administration has used in the trade war with China to justify tariffs against what the United States says are unfair trade practices.

The US administration took a strong stance previous year against the EU's own digital tax plans, calling European proposals to tax tech giants discriminatory "against US companies". He chose to impose the air tax on the plane after he was forced to drop the idea of raising the diesel fuel levy due to the violent protests of the yellow vests in the country.