WASHINGTON: In July, the French Senate approved a 3% levy that will apply to revenue from digital services earned in France by companies with more than 25 million euros in French revenue and $838 million worldwide.
The US Trade Representative’s Office in July opened a probe into the new tax it called “unreasonable.” The office could issue new tariffs on French goods or other trade restrictions after the public comment period closes on August 26.
Jennifer McCloskey, vice president for policy at Information Technology Industry Council, which represents Amazon, Facebook, Apple, Google, and many others, will testify Monday that the tax “represents a troubling precedent, unnecessarily departs from progress toward stable long-lasting international tax policies and may disproportionately impact US-headquartered companies.”
The group added, “there is a high likelihood that the cost of the tax will be passed down the supply chain.”
A group of companies including Airbnb, Amazon, Expedia Group, Facebook, Google, Microsoft, and Twitter said in joint written comments to USTR the tax “is unjustifiable in that it infringes international agreements, and unreasonable in that it is discriminatory, retroactive and inconsistent with international tax policy principles.”
US President Donald Trump threatened to tax French wines over the tax. The White House has said, “France’s unilateral measure appears to target innovative US technology firms that provide services in distinct sectors of the economy.”
Other EU countries, including Austria, Britain, Spain, and Italy, have also announced plans for their own digital taxes.
They say a levy is needed because of big, multinational internet companies such as Facebook and Amazon book profits in low-tax countries like Ireland, no matter where the revenue originates.