Trump lands pre-emptive blow in digital tax fight

Trump lands pre-emptive blow in digital tax fight

Amazon applauded the Trump administration's decision. The French senate passed a bill to impose a three per cent levy on global tech companies that have at least €750m in worldwide revenue and digital sales of €25m in France.

Le Maire said threats for the United States were not a solution. Most of companies set to be impacted by the tax are U.S-based.

French lawmakers on Thursday approved a bill that would impose a new tax on services provided by large internet companies despite the risk of a costly backlash from the Trump administration. It would affect about 30 companies in total.

Defending the new tax on Thursday, French Finance Minister Bruno Le Maire said France was "sovereign and decided its own tax rules".

The French have reacted angrily to the news of the investigation and said it was free to decide how it applies taxes as a sovereign country.

The move comes after U.S. President Donald Trump ordered his most senior trade official to look into whether the law unfairly targets large U.S. tech companies.

"We will have the G7 finance ministers in the next 10 days in Chantilly (in northern France), the USA secretary of the treasury will be there".

French Finance Minister Bruno Le Maire said told Le Parisien in April: "The fact that these companies pay less tax than a cheese producer in Quercy is a real problem".

For the U.S, though, it's not just about France's right to tax revenue in its own country, Gary Clyde Hufbauer of the Peterson International Institute of Economics recently wrote.

Trade groups that represent tech giants, such as the Computer and Communications Industry Association and the Internet Association, also have attacked the French legislation as discriminatory.

The Organization for Economic Cooperation and Development is working on a global solution on taxation for digital companies by 2020. The body aims to have a plan by year-end and an global agreement in 2020. But it remains against using tariffs as a negotiating tool. It will be a 301 probe, the same kind that led to tariffs being placed on China previous year.

The new law aims at plugging a taxation gap that has seen some internet heavyweights paying next to nothing in countries where they make huge profits as their legal base is in smaller European Union states.

The move means the United States could end up imposing retaliatory tariffs on French products.

France Thursday approved a 3% digital services tax on the revenues of American tech companies, including Google, Amazon and Facebook, defying the USA administration's warning.

In government documents seen by Yahoo Finance UK, officials said there is a "misalignment" in global tax rules between where companies now pay their taxes and where they profit from their users.

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