Tech Industry

US to probe French plan to tax tech companies

The proposal would levy a 3% tax on revenue that large tech companies earn providing services in France. Some of the companies mentioned include Amazon, Apple and Google.

Apple is among the companies that could be affected by a French proposal to levy a 3% tax against large tech companies' revenue derived in France.
Getty Images

The Trump administration said Wednesday that it would investigate whether France's planned tax on technology companies amounts to unfair trade practices by discriminating against US companies. Some of the companies that could be affected include Apple, Facebook and Google.

The inquiry, to be conducted by the US trade representative, comes after French Finance Minister Bruno Le Maire proposed a 3% tax on certain revenue that large tech companies earn providing digital services to users in France. The 301 investigation -- the same type of probe that led to tariffs on China last year -- raises the possibility of the US imposing new tariffs.

"The United States is very concerned that the digital services tax which is expected to pass the French Senate tomorrow unfairly targets American companies," US Trade Representative Robert Lighthizer said in a statement Wednesday announcing the investigation.

"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," he said.

The proposal, which is close to passing both houses of the French parliament, would affect companies with at least 750 million euros ($845 million) in worldwide revenue and digital sales totaling 25 million euros in France. French lawmakers refer to the proposal as Les GAFA, an acronym for Google, Amazon, Facebook and Apple -- companies France has accused of not paying their fare share of income tax.

Apple reportedly reached a deal last year with French authorities to back-pay 500 million euros ($571 million) in taxes. Le Maire warned in December that his country would start taxing tech giants at a national level if European Union countries couldn't agree on a joint tax on digital revenues. 

The Internet Association trade group, which represents Google, Facebook, Amazon, Microsoft and other major tech companies, applauded the investigation.

"Today's move by USTR is an important step in exercising American leadership to stem the tide of new discriminatory taxes across Europe," Jordan Haas, the director of trade policy for the Internet Association, said in a statement.