U.S. to probe French plan to tax big tech companies

Donald Trump ordered the investigation

Donald Trump ordered the investigation Credit AFP

They say a tax is needed for multinational internet companies who are able to profit in low-tax countries despite having no physical presence.

According to France's Finance Minister Bruno Le Maire, the tax would raise up to €500 million ($565 million) per year.

"We want to impose on these new business models the same rules that apply to all other economic activities", he said.

On Wednesday, US President Donald Trump ordered an investigation into the move, which could lead to US tariffs or other restrictions.

Previous investigations launched by Washington have covered European Union and Chinese trade practices.

But according to Lighthizer's office, there's a reason to believe that France is "unfairly targeting the tax" on United States companies.

Robert Lighthizer, a US Trade Representative, raised concerns the about the new tax in France, which was passed by the French Senate on Thursday, saying it "unfairly targets American companies".

The section 301 investigation, which is being run by the US Trade Representative's office, has said it will hold hearings to allow for public comment on the French tax issue for several weeks before issuing a final report.

But French Economy Minister Bruno Le Maire France rejected the U.S. reaction, saying "threats" were not the way to resolve such disputes.

The minister advised that the US and France can do well by reaching agreements instead of bandying out threats against "fair taxation" of internet giants. Meanwhile, the USA is continuing to support the efforts by the Organisation for Economic Development (OECD) in reaching a multilateral agreement on taxes in the digital economy.

But this compromise failed to be agreed, leaving France to press ahead with its own tax which it introduced on 1 January 2019. Or the move gives added energy to calls for a multilateral agreement on how digital firms should be taxed globally, putting an end to the squirreling-away of vast sums of money made by internet giants.

The U.K. government on Thursday unveiled draft legislation for its proposed tax, which will be consulted on until September.

The measures would hit companies in these sectors with global revenues of more than £500m and revenue from United Kingdom users of more than £25m.

"It is also a headache for the finance ministry".

France is taking action against climate change by establishing an "eco-tax" on outgoing air transportation to support more sustainable forms of travel.

He touted France as "a sovereign state" which he stressed "alone decides on its taxation mechanisms and it will continue to do so".

"For us, (the tax) is totally compliant with worldwide agreements", a French finance ministry source told Reuters. The French government has in the past asked the USA to work with Europe at the OECD for a "fair digital tax".

A$AP Rocky's Attorney Clears Up Reports on Conditions in Swedish Jail
Here’s how you can watch Chandrayaan 2 launch live