The US has launched a probe that may see France slapped with sanctions for its plan to tax large technology behemoths, which Washington claims will ‘unfairly’ target Silicon Valley giants, Financial Times reported.
France is proposing a new digital services tax would impose a 3 per cent annual levy on French revenues of digital companies with yearly global sales worth more than $844 million and French revenue exceeding 25 million euros.
France's lower house of parliament approved this proposal last week. French senators will vote on Thursday (11 July) whether to pass the new tax. France seeks to generate an additional $566 million from the new tax scheme,
The new tax is likely to affect many US companies including Alphabet (the parent company of Google), Apple, Facebook and Amazon.
US Trade Representative Robert Lighthizer expressed serious concern that the tax "unfairly targets American companies".
The US administration will investigate the tax under Section 301 of the Trade Act of 1974 — the same provision the Trump administration used last year to probe China's technology policies, leading to tariffs on $250 billion worth of Chinese imports.
The retaliatory US tariff, if it comes through, is likely to result in tariffs on French wine, cars etc.
According to the FT report, the US president Donald Trump viewed the French tax as a direct attack on American businesses. Trump himself is known to nurture hostility towards large technology companies including public spats with tech czars like Jeff Bezos.