United States (US) President Donald Trump has reacted sharply to the French government’s decision to impose a digital tax on multi-national companies operating in France, asserting that only the US government had a right to tax American tech firms, reports Financial Times.
Taking to Twitter to attack the move by the administration of French President Emmanuel Macron, Trump promised to take retaliatory measures.
France just put a digital tax on our great American technology companies. If anybody taxes them, it should be their home Country, the USA. We will announce a substantial reciprocal action on Macron’s foolishness shortly. I’ve always said American wine is better than French wine!— Donald J. Trump (@realDonaldTrump) July 26, 2019
Previously, the US trade representative had launched its own investigation to analyse the nature of France’s digital tax, and whether it could constitute an unfair trade practice under World Trade Organisation (WTO) rules.
“The Trump administration has consistently stated that it will not sit idly by and tolerate discrimination against US-based firms. The US trade representative has already launched a Section 301 investigation into France’s digital services tax, and the administration is looking closely at all other policy tools,” said White House spokesperson Judd Deere.
European countries have in recent years been grappling with the question on how to tax foreign tech companies which often make large revenues in their territories but get off without paying almost any taxes. Other European nations may soon follow France’s example to tap into this new source of revenue, with the government of the United Kingdom (UK) currently deliberating a similar digital tax.
Some, like Italy, have already imposed one along the lines of France. However, there still doesn’t seem to be much progress in moving towards a common European Union (EU) tax regime on digital services.