France to Trump: We will tax your companies, you can't stop us

French digital service tax target US companies unfairly says administration

French digital service tax target US companies unfairly says administration

The U.S. has opened an investigation into a new French tax on digital services.

With Britain and a number of other European countries planning to follow France's lead by imposing similar levies, the pressure is mounting on the giants of California's Silicon Valley.

"It's a taxation on revenues (and not on profits), encouraging companies to reduce their level of investments and innovation", he said. President Trump criticized the new digital tax a day before the French Senate voted on the measure, but it passed anyway.

The national proposals come after an EU-wide effort to pass a digital tax on corporations failed previous year, thanks to resistance from countries like Ireland and the Netherlands.

Nicknamed the Gafa tax - an acronym for Google, Apple, Facebook and Amazon - the measure, which became law on Thursday after receiving the approval of the French Senate, imposes a 3 per cent charge on the total annual revenues of the largest technology firms providing goods and services to French consumers. France forecasts that the tax could bring in as much as €500m a year. Taxing revenue is meant to counter the complex arrangements most United States tech firms have in place to avoid paying high taxes on their profits. The levy will apply to companies with more than 500 million pounds ($626 million) in revenue, if more than 25 million pounds comes from British users. In a joint statement, Republican Chuck Grassley of Iowa, committee chairman, and Democrat Ron Wyden of OR said: "The digital services tax that France and other European countries are pursuing is clearly protectionist and unfairly targets American companies in a way that will cost U.S.jobs and harm American workers".

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"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", French Finance Minister Bruno Le Maire said in Parliament, according to the Washington Post. Estimates suggest it will raise €400m in its first year.

Both pieces of legislation apply only to the biggest tech companies, many of which are American.

France has hit back at the United States government amid a spiralling row on taxes.

The Computer & Communications Industry Association on Wednesday applauded the US Trade Representative's move, saying the tax would retroactively require US internet giants operating in France to turn over a percentage of their revenues from the beginning of this year and violates worldwide trade commitments.

Once an appropriate global solution has been found, the United Kingdom would drop its own tax, the government added.

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