French Parliament Passes Tax Law on Tech Giants Amid US Investigation

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US President Donald Trump has ordered an investigation into France's planned tax on internet and technology giants.

"The United States is very concerned that the digital services tax which is expected to pass the French Senate tomorrow unfairly targets American companies", U.S. trade representative Robert Lighthizer said in a statement. The section 301 investigation, which is being run by the USA 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.

"The President has directed that we investigate the effects of this legislation and determine whether it is discriminatory or unreasonable and burdens or restricts United States commerce".

The measure was initially adopted by the lower house on July 4.

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.

Finance ministers and central bankers at a Group of Seven meeting in Chantilly, France next week will discuss global taxation and competition and the digital economy. The measure would levy a 3 percent tax on certain revenue that major tech companies earn in France.

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But French economy minister Bruno Le Maire France rejected the U.S. reaction on Thursday, saying "threats" were not the way to resolve such disputes. Currently, the companies pay almost no tax in countries like France where they have large sales. Le Maire warned in December that his country would start taxing tech giants at a national level if European Union countries couldn't agree on a joint tax on digital revenues.

Any digital company with a revenue of more than 750 million euros - of which at least 25m is made in France - would be subject to the tax.

The French government says the tax does not specifically target USA companies and will affect European and Asian firms as well.

"By attempting to unilaterally overtax American players, Bruno Le Maire has triggered a trade war that penalizes French technology today and will penalize tomorrow many sectors that make the French economy successful, including wine, automobiles and luxury", ASIC president Giuseppe de Martino said. Trump's threat to impose a tariff of as much as 25% on European auto exports has cast a cloud over the negotiations as well. The decision comes after Washington launched a probe into the tax.

"Between allies, I believe we can and must resolve our differences in another way than through threats", he said during his address to the French Senate in the run-up to the vote.

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