France approves tax on tech giants despite threats from Trump administration

The probe could pave the way for the imposition of tariffs- something Mr Trump has done repeatedly since taking office

Late Wednesday, the Trump administration announced an investigation into the tax under the provision used past year to probe China's technology policies, which led to tariffs on $250 billion worth of Chinese imports.

Finance Minister Bruno Le Maire has said France isn't the only country advancing a tax on digital companies and that using the threat of "blackmail" to stop them is pointless.

The French Senate estimated that the tax could bring in €400 million ($588 million Cdn) this year and €650 million ($955 million) next.

USTR said in a statement the "services covered are ones where United States firms are global leaders".

France on Thursday adopted a pioneering tax on internet giants like Google, Amazon and Facebook despite US threats of new tariffs on French imports if Paris went ahead with the plan.

Le Maire said the tax would target some 30 companies, mostly American but also Chinese, German, Spanish and British, as well as one French firm and several firms with French origins that have been bought by foreign companies.

The 3% levy will apply to revenue from digital services earned in France by firms with more than 25 million euros in French revenue and 750 million euros ($845 million) worldwide.

Facebook and Apple declined to comment.

The lawmakers included a suggestion to use a section of the tax code that would double the rate of USA taxes on French citizens and companies in the U.S.

"We support the United States 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.

Senators Chuck Grassley and Ron Wyden, the top Republican and Democrat on the Senate Finance Committee, sent a letter to Treasury Secretary Steven Mnuchin last month asking him to bolster efforts to convince France to back off from its digital tax.

"France is a sovereign state and it alone decides on its taxation mechanisms and it will continue to do so", he said.

This comes after US Trade Representative Robert Lighthizer announced that he was launching an investigation into France's planned tax on tech giants.

The move, which will take effect from 2020, will see a tax of 1.5 euros imposed on economy-class tickets on internal flights and those within Europe, with the highest tariff applied to business-class travellers flying outside the bloc, Transport Minister Elisabeth Borne said.

Bloomberg Tax reported the investigation earlier, citing two people familiar with the matter.

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