France adopts digital tax on tech giants like Google, Facebook

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The 301 investigation - the same type of probe that led the U.S. to slap tariffs on China past year - is a rare tool for Washington to use against a close ally, underscoring the Trump administration's intent to continue playing tough on trade. Prior investigations have covered Chinese trade practices and European Union subsidies on large commercial aircraft. The French budget is due to receive up to €500 million ($563 million) per year through the GAFA tax, and this income is expected to rise "quickly", according to the French Finance Ministry.

France on Thursday adopted a pioneering tax on internet giants like Google, Amazon and Facebook despite US threats of new tariffs on French imports if Paris went ahead with the plan.

Lighthizer said Trump "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".

"We will redouble our efforts for a consensus-based solution with a final report by 2020", they said in a statement. Any digital company with revenue of more than €750 million ($850 million) - of which at least €25 million is generated in France - would be subject to the levy.

Technology industry lobby group ITI, which represents Apple, Amazon, Google and other tech companies, urged the United States not to resort to tariffs in the dispute.

This combination of pictures created on July 10, 2019 shows a Facebook logo on July 4, 2019 in Nantes, an Apple logo in San Francisco on September 7, 2016, a Google logo in China's Chongqing on August 23, 2018, and an Amazon logo in NY on September 28, 2011.

"We support the USA government's efforts to investigate these complex trade issues but urge it to pursue the 301 investigation in a spirit of worldwide cooperation and without using tariffs as a remedy", Jennifer McCloskey, ITI's vice president of policy, said in a statement.

Washington has criticized the move, with US Trade Representative Robert Lighthizer expressing concern that Paris was "unfairly" singling out American companies.

The administration also got some bipartisan support from the top members of the Senate Finance Committee.

He touted France as "a sovereign state" which he stressed "alone decides on its taxation mechanisms and it will continue to do so".

Le Maire said he was warned about the so-called section 301 investigation during a "long conversation" with US treasury secretary Steven Mnuchin on Wednesday, saying it was the first time such a step had been taken in the history of French-US relations.

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