US to probe French plan to tax tech companies

The logos of Amazon Apple Facebook and Google in a combination

The new tax will be based on sales generated in France, rather than on profits.

The planned 3% tax on the annual revenues of firms providing services to French consumers will only apply to significant companies, "where United States firms are global leaders", the USTR said.

The legislation - dubbed the GAFA tax - an acronym for Google, Apple, Facebook and Amazon - was passed by a simple show of hands in the Senate upper house after previously being passed by the National Assembly lower chamber.

The White House is launching an investigation into France's proposed tax on internet giants like Google, Amazon and Facebook - a move that could lead to US taxes on French imports.

Lighthizer's agency will investigate the tax under Section 301 of the Trade Act of 1974 - the same provision the Trump administration used previous year to probe China's technology policies, leading to tariffs on $250 billion worth of Chinese imports.

U.S. Trade Representative Robert Lighthizer expressed concern that the tax, expected to be passed by the French Senate Thursday, "unfairly targets American companies".

France's lower house of parliament approved the pioneering tax last week.

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Such a move is supported by Google which believes it would mean Silicon Valley tech giants would pay less tax in the USA and more in other jurisdictions, in a departure from the longstanding practice of paying most taxes in a company's home country.

The tech industry warns it could lead to higher costs for consumers.

"France's move to enact a unilateral, national digital tax opens the door to a fragmented, inefficient global tax system that would reduce business certainty and impede innovation, job creation, and economic growth worldwide", Ms Jennifer McCloskey, vice president of policy at ITI, a USA tech-industry association, said in a statement this week.

"We recognise the challenges that arise as the global economy becomes increasingly digitised but proceeding unilaterally would complicate economic relationships around the world and lead to undesirable measures to address France's action".

"France is a sovereign state, it decides its fiscal provisions in a sovereign manner, and it will continue to decide its tax decisions in a sovereign manner", said Bruno Le Maire, France's finance minister, speaking to the French Senate on Thursday.

Amazon founder and chief executive Jeff Bezos owns The Washington Post.

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