Digital service tax planned by France on tech companies has been approved on Thursday.
The U.S. will be investing into the matter to see if the French tax targets American companies unfairly. President Trump has ordered a probe into the digital tax imposed on U.S. tech companies.
The probe is investigated by Robert Lighthizer, the U.S. Trade Representative. The investigation will be checked under the Trade Act 1974, Section 301. This law was used to impose tariffs on Chinese imports.
All American companies should not be unfairly targeted, says Lighthizer. He says that President Trump has asked the legislature to be investigated so that the U.S. commerce is not unreasonable affected, burdened or restricted.
By the tax approved by France on Thursday, tech giants like Amazon, Google and Facebook will be taxed on their revenue. This 3 percent tax will apply on about 30 large companies which are mainly from the U.S. This tax will increase its revenue y almost £360m million this year.
The Finance Minister Bruno Le Maire of France has stated that France has its own tax rules and will continue in the same manner.
France argues that these giant tech firms exploit loopholes in the global tax. They locate low-taxing countries for their headquarters so that their profits are enhanced and tax bills are minimized.
As the services affect U.S. firms that have global leadership, this law will be investigated, final report prepared and recommendations made, says Lighthizer, who is in charge of this investigation.
The investigation may lead to a retaliatory tariff by the U.S. on French goods, which would bring another global trade war, fear economists.
This decision to launch an investigation into the discriminatory action by France is applauded says Republican Sen. Chuck Grassley and Democrat Sen. Ron Wyden. They have jointly said that this tax targets the U.S. companies that will affect American workers and their jobs.