The US threatens France with the introduction of a controversial digital tax with new punitive tariffs. The tax targeted targeted large American Internet companies such as Amazon, Google and Facebook, it said in a Monday evening (local time) published report by the US Trade Representative.
Therefore, the imposition of punitive tariffs of up to 100 percent on French imports worth about 2.4 billion dollars is proposed, it said. This could include Champagne, certain cheeses, yoghurt, butter, some cosmetics and handbags. The actual imposition of duties is to be decided after hearings in January.
"Today's decision is a clear signal that the United States will act against digital taxes, discriminate against or otherwise unduly incriminate US companies," said Trade Representative Robert Lighthizer. Similar tax initiatives from Austria, Italy and Turkey could also be subject to a formal review, he warned. The US government will defend itself against "increasing protectionism" from Europe against US Internet companies, Lighthizer continued.
Lacking a European or global solution, Paris had introduced digital taxation on its own. Internet companies, which generate more than 25 million euros in sales in France, are therefore expected to pay taxes on local online advertising revenues. Many of the affected companies are based in the US.
The Office of the Trade Representative argued that French digital tax infringed applicable taxation principles for several reasons. The tax discriminates against US companies, aimed at sales and not profits, and is levied independently of any physical presence in France, the report said.
Macron and Trump meet in London
The US government had already announced after the adoption of the tax law in the French Senate on 11 July, an audit of the impact on US trade. President Donald Trump then threatened punitive tariffs on French products. If someone taxed the big American Internet companies, then it should be the US, he said back then.
Trump and French President Emmanuel Macron will meet on Tuesday during the NATO summit in the UK. At the G7 summit in August, Macron announced that he and Trump had reached an agreement designed to prevent direct conflict between the two countries. Talks about an international agreement on a digital tax have not yet been successful.
French Finance Minister Bruno Le Maire had defended the French digital tax on Monday. "We will never, never, never give up the will to fairly tax the digital giants in order to have a fair tax system of the 21st century," the minister told France Inter. (AP)