USTR confirms investigation into French plan to tax U.S. tech giants

On July 10, 2019, the United States Trade Representative confirmed that it has initiated an investigation under Section 301 of the Trade Act of 1974 of the Digital Services Tax (DST) of the Government of France. The French DST bill would impose a 3% tax on total annual revenues generated by some companies from providing certain digital services to, or aimed at, French users. The tax applies only to companies with total annual revenues from the covered services of at least EUR750M globally and EUR25M in France. The services covered are ones where U.S. firms are global leaders. The structure of the proposed new tax as well as statements by officials suggest that France is unfairly targeting the tax at certain U.S.-based technology companies. “The United States is very concerned that the digital services tax which is expected to pass the French Senate tomorrow unfairly targets American companies,” said U.S. Trade Representative Robert Lighthizer. “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.”

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