Leatherbiz reports that the US Trade Representative (USTR) has given notice that it believes taxes now being imposed in France on US digital companies including Google, Apple, Facebook, and Amazon are “unreasonable, discriminatory and burden US commerce”.
In response, the USTR has said the US could carry out its threat to impose additional tariffs of up to 100% on 63 types of imported products that come into the US market from France. These products will include leather handbags.
France announced a new 3% digital services tax (DST) on e-commerce companies whose scant physical presence in France has allowed them to circumvent up till now taxes that other consumer-facing companies have to pay. It approved the new tax in July and said it would apply it retroactively from early 2019, possibly raising as much as €400 million this year.
In a statement on December 2, the USTR said its investigation into the matter had found that the French DST “discriminates” against US digital companies, such as Google, Apple, Facebook, and Amazon. It went on: “In addition, the French DST is inconsistent with prevailing tax principles on account of its retroactivity, its application to revenue rather than income, its extraterritorial application, and its purpose of penalising particular US technology companies.”
Furthermore, the USTR has said it could investigate the possibility of taking similar action on products the US imports from Italy, Austria and Turkey because of their proposed taxes on digital services.
It has invited public comment on these issues and will hold hearings in early January. It said it expects “to proceed expeditiously” soon after these hearings.