Raymond Doherty 11 Jul 2019 11:11am

US launches probe into French digital tax

US president Donald Trump has ordered an investigation into a tax that his administration claims, “unfairly targets American companies”

The French government plans to introduce the tax in 2020, with large digital companies such as Facebook, Amazon and Uber among those that will be affected.

The 3% tax is targeted at businesses with a worldwide digital revenue of at least €750m (£674.3m) and French revenue of more than €25m. It is "fiscal justice” for companies accused of not paying their fair share, according to France finance minister Bruno Le Maire. He predicted it could yield €500m a year.

It has angered the US government, however, which has ordered a Section 301 probe to determine if the levy poses an unfair trade practice.

“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 US 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.”

Under the Trump administration the US has become increasingly aggressive on trade and is currently embroiled in trade skirmishes with China and the EU.

In his most recent Budget, UK chancellor Philip Hammond announced the implementation of a similar 2% digital services tax due to come into effect from April 2020.

Germany, along with France, has previously pushed for such a tax to be implemented, but other nations are reticent as this could hurt innovation and keep multinationals away from their countries.